AUSTIN, Texas — The founder and former majority owner of a downtown Austin vault has been charged with fraud and misusing money customers gave him to buy gold, silver and platinum on their behalf.

Federal prosecutors charged Charles McAllister on Tuesday after millions of dollars’ worth of gold and silver bullion vanished from Bullion Direct over two years ago, the Austin American-Statesman reported .

The indictment stated The government is seeking more than $16 million from McAllister under U.S. criminal forfeiture statutes, according to the indictment. Civil court filings show Bullion Direct’s customers valued their disappeared money and metal at $25 million.

In July 2015, when Bullion Direct declared bankruptcy, hundreds of investors learned that the bullion they thought they’d purchased had disappeared from two safes in an Austin office building. The cumulative weight of the missing bullion represented dozens of standard-sized gold bars and hundreds of silver ones, according to court documents. An estimated 1,400 ounces (39,688 grams) of platinum and palladium was also missing.

Prosecutors alleged that instead of buying the precious metals ordered by his customers, McAllister used their money for himself and to keep his business afloat.

“Customers were lulled into the false belief that precious metals had been purchased and were stored in (Bullion Direct’s) vault, when … customer funds were used to pay for corporate expenses, investments in other entities or applied by McAllister for his own and his family’s personal use and benefit,” according to documents filed in U.S. District Court that were unsealed Tuesday. The indictment said McAlliste4r was illegally misdirecting money since 2009.

James Ardoin III, an attorney for McAllister, didn’t respond to the newspaper’s requests for comment.


Information from: Austin American-Statesman, http://www.statesman.com