What Is the Lear Capital Lawsuit? Settlements, Bankruptcy & Fines

The Lear Capital lawsuits were a series of state enforcement actions accusing the Los Angeles precious metals dealer of charging hidden commissions of up to 33 percent and steering mostly elderly investors into overpriced coins. Between 2022 and 2023, Lear paid roughly $14.25 million across three settlements, filed for Chapter 11 bankruptcy, and agreed to lasting restrictions on how it sells and describes its products. The company emerged from reorganization and still operates.

What Regulators Said Lear Was Doing

At the center of every case was a fee Lear’s founder, Kevin DeMeritt, reportedly called the “ask to cost” charge. The New York Attorney General’s 2021 petition alleged this commission could reach 33 percent of a customer’s purchase, meaning a $100,000 investment could lose a third of its value to fees the moment it was made.¹

Regulators said salespeople pushed customers away from standard bullion, which carried a 2 to 10 percent commission, and toward “semi-numismatic” coins like the Canadian Wildlife series, which carried the 33 percent fee.¹ Customers were told the coins had collectible value above their metal content. When those same customers later tried to sell them back, Lear allegedly labeled the coins “underperforming,” bought them at a discount, and resold them at full markup to new buyers.

Fees often did not appear on invoices at all, and when they did, they were printed in tiny faint type on receipts delivered only after the sale closed.¹ The Los Angeles City Attorney alleged Lear kept customer contact on the phone until purchases were complete, leaving no written trail of what salespeople had promised.²

Lear denied the allegations in each case and agreed to settle without admitting wrongdoing, saying it recorded sales calls, provided invoices, and obtained signed transaction agreements.³

The New York Settlement

Attorney General Letitia James sued Lear and DeMeritt personally on June 17, 2021, alleging the company had defrauded nearly 1,000 New York investors of about $10 million out of more than $43 million in state sales since 2014.⁴ Many of the targeted customers were elderly Western New Yorkers using retirement savings. The petition also alleged Lear had never registered in New York as a commodity broker-dealer, commodity investment advisor, or telemarketer.¹

On January 3, 2022, Lear agreed to a consent order paying $6 million in restitution to eligible New York customers.⁵ The order also required clear fee disclosures, a 24-hour cancellation window for retirement transactions and higher-fee purchases, better complaint tracking, and staff training.⁶

The Los Angeles Settlement

The Los Angeles City Attorney had already sued Lear in June 2019 in Los Angeles County Superior Court, raising similar allegations: inflated fees disguised as small charges, phone-only sales designed to avoid documentation, and targeting of elderly and inexperienced investors.² The office also alleged Lear threatened customers who tried to go public with complaints.

That case settled on January 10, 2022, for $2.75 million. Ninety percent of the money went to restitution and 10 percent to statutory penalties.⁷ Eligibility was limited to customers who had paid transaction fees above 15 percent, with the claims process handled by a firm called Simpluris.³ Going forward, Lear had to issue invoices showing the actual fee and give customers 24 hours to cancel after receiving a written invoice.²

The Bankruptcy and Multistate Recovery

Weeks after settling in New York and Los Angeles, Lear filed Chapter 11 in Delaware on March 2, 2022, under the small-business Subchapter V process.⁸ A coalition of 24 states, the District of Columbia, and Puerto Rico objected, telling the court Lear did not actually need bankruptcy relief and was using it to gain a “tactical litigation advantage” over the regulators investigating it.⁹ The case went forward anyway, and the reorganization plan was confirmed on June 8, 2023.

The plan created a $5.5 million fund to compensate investors and resolve investigations that more than 30 states had been running through the North American Securities Administrators Association.¹⁰ The fund was financed by company cash and a personal contribution from DeMeritt.¹¹

Customers who filed timely bankruptcy claims received refunds under a formula in the plan. Customers who did not file claims but bought precious metals from Lear between January 1, 2016, and March 3, 2022, were eligible for a pro rata share of whatever remained after filed claims were paid.¹²¹³¹⁴

What the Settlements Added Up To

Across the three enforcement tracks, Lear was required to pay roughly $14.25 million:

Where Lear Capital Stands Now

Lear completed its Chapter 11 reorganization in early 2024 and continues to operate as a retail precious metals dealer, with DeMeritt still serving as a company spokesperson.¹⁵¹⁶

Restrictions from the bankruptcy settlement remain in place. Lear cannot misrepresent its fees, offer portfolio assessments of a customer’s securities holdings, hold itself out as an investment adviser, or give investment advice.¹⁷ The improved sales-disclosure requirements imposed through the state cases continue to apply as well.¹² The claims windows tied to the New York, Los Angeles, and bankruptcy settlements have closed; the restrictions on Lear’s conduct are what remain for current and future customers.

1
NY AG. Verified Petition Against Lear Capital, Inc. and Kevin DeMeritt
2
Beverly Press. Feuer Announces Settlement in Lawsuit Against Lear Capital
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Simpluris. Lear Capital Settlement Notice
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NY AG. Attorney General James Sues Lear Capital and Founder for Defrauding New Yorkers
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NY AG. Attorney General James Secures $6 Million From Lear Capital, Ending Its Deceptive Business Practices in New York
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ThinkAdvisor. Precious Metals Firm Ordered to Pay $6M Over Hidden Commissions
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Random Lengths News. Settlement for Lear Capital
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Inforuptcy. Bankruptcy Case Lear Capital, Inc.
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Bloomberg Law. Lear Capital’s Bankruptcy Not Filed in Good Faith, 24 States Say
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DFPI California. California Joins Multi-State Group to Recoup Overcharges for Investors in Commodity Firm Lear Capital Bankruptcy
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Vermont DFR. Lear Capital First Amended Plan of Reorganization
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Iowa Insurance Division. States Recoup Overcharges for Investors in Commodity Firm Bankruptcy
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DISB DC. DC and State Regulators Recoup Overcharges From Precious Metal Company Deceptive Activity
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Texas SSB. Texas Joins Multi-State Group to Recover Overcharges for Investors in Commodity Firm Lear
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Lear Capital. Lear Capital Reorganization
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Lear Capital. Lear Capital Business
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Washington DFI. WA Among States to Recover $5.5 Million in Overcharges From Lear Capital Investors