International Rarities Corp., a Minneapolis-based coin dealer under investigation by the Minnesota Attorney General's office on allegations of consumer fraud, appears headed for bankruptcy "within the next several weeks."
Attorneys for the company broke the news in a federal court filing Friday in Florida in an attempt to explain why two representatives of the company had skipped a May 18 deposition in the case.
Dean Dellinger, 89, of Milton, Fla., alleges the company defrauded him of several hundred thousand dollars on his coin purchases.
David Marion, the coin company's co-founder and CEO, and Martin Klevens, one of its top salesmen, disregarded the advice of the company's Florida-based attorneys and failed to appear for the scheduled deposition, incurring costs and causing delays in related depositions.
Dellinger's attorney, Joe Zarzaur, cited a series of what he characterized as "willful" discovery delays by IRC and asked the judge for sanctions, including a default judgment. If granted, the only thing remaining to litigate would be the amount of damages.
IRC acknowledged that its attorneys, W. Lee Elebash and Charles Wiggins, had advised the firm that it was obligated to participate in pretrial discovery unless and until a judge granted a stay in those proceedings. They said the firm recently began discussing a bankruptcy petition with its attorneys in Minnesota and has decided to go forward with it.
"IRC did not attend the depositions ... based on the belief that it needed to devote limited resources to pursuing that reorganization as quickly as possible," the firm's attorneys wrote.
They said IRC contests Dellinger's fraud allegations and therefore opposes the request for a default judgment.