In order to understand this scam, you have to break down the sensibility of the request. First of all anyone with millions of dollars available for the purchasing of gold does not need a “mandate” to help them. Mandates are brokers that are middlemen that attempt to seek commodities for sale, and assist in their purchase in order to be paid a commission. Often these mandates are fooled into seeking sellers of commodities that will scour the globe with a set of procedures in hand, such as the Swiss Procedure. These brokers are not sophisticated enough to know that they are simply perpetuating a scam as they think what they are doing is legitimate.
Ask yourself – What would I expect to do if I was a buyer? Would I look to take delivery of any valuable item ‘on account’ and pay for it after delivery? The answer is no.
Example of the “Swiss Procedure” follows below:
1 The Seller issues: Soft offer with complete procedures.
2 Upon review and acceptance of the Soft offer, Buyer request Seller to issue FCO signed on the Sellers or Mandates legal letterhead along with Mandate papers (if a Mandate is used)
3 Upon accept and verification of the Sellers information, the Buyer/Buyer’s Mandate signs FCO and submits a letter of intent signed on the Buyers or Mandates legal letterhead along with Mandate papers (if a Mandate is used) and a contract.
4. The Seller/Seller’s Mandate responds with the signed and sealed contract with full banking coordinates, and an invitation for the Buyer’s bullion officer to contact the Seller’s bullion officer.
5. The Buyer/Buyer’s Mandate signs the contract, and accepts the invitation of the Seller’s bullion officer. The Buyer/Buyer’s Mandate sends a hard copy of the contract/agreement signed by both Buyer and Seller with full banking coordinates.
6. The Buyer’s bullion officer initiates the contact with the Seller’s bullion officer by KTT.
7. The Seller’s bullion officer will be instructed by the Seller to verify the Au metal, the quantity available, and to disclose any/all liens and encumbrances attached to the metal.
8. Upon receipt of the proof of existence of the Au metal and the certificate of authority to sell, the Buyer will instruct his bullion officer to confirm the availability of funds to be used as payment when the gold is delivered.
9. The Buyer and the Seller agree on a window time for exchange. The payment to the Seller will be disbursed within 24 hours against the transfer of ownership of the metal.
10 Commissions/fees will be paid upon closing of each tranche to the parties stipulated in the contract, in the amounts shown.
11 All subsequent tranches will close tabletop as described above.