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SEC announces charges in multimillion dollar scheme defrauding retirees through coin sales

On Behalf of | Feb 7, 2022 | Financial Advisor Misconduct

A California company and its owner have been charged with orchestrating a multimillion dollar fraud scheme that targeted retirees, the Securities and Exchange Commission said. The SEC issued a news release this week announcing the charges against Jeffrey Santulan and his company, Safeguard Metals LLC.

The SEC filed a complaint in federal district court in Los Angeles, alleging that the scheme was carried out from December 2017 through at least July 2021. According to the complaint, Santulan and Safeguard acted as advisers for hundreds of investors who were at or near retirement age, and “persuaded investors to sell their existing securities, transfer the proceeds into self-directed Individual Retirement Accounts, and invest the proceeds into gold and silver coins by making false and misleading statements about the safety and liquidity of the investors’ securities investments, Safeguard’s business, and its compensation.”

The defendants are also accused of misleading investors about the commissions and markups on the sales of the coins. On sales of silver coins they charged average markups of about 64% as opposed to the 4% to 33% markups they had told investors, according to the complaint. Safeguard and Santulan allegedly sold $67 million in gold and silver coins to more than 450 retail investors, and kept $25.5 million from the markup posted on the sales.

“The federal securities laws prohibit deceptive conduct and material misrepresentations in the purchase or sale of securities,” said Kathryn A. Pyszka, an Associate Director in the SEC’s Chicago Regional Office. “We will take action when, as alleged, parties fraudulently induce investors to sell their securities through lies and deception.”

The SEC said Safeguard had fraudulently marketed itself as a full-service investment firm with offices in London, New York City, and Beverly Hills when Santulan was actually running the company from a small leased space in a Woodland Hills office building.

The defendants are charged with violating the antifraud provisions of the federal securities laws. The SEC is seeking permanent injunctions against them, along with disgorgement of their allegedly ill-gotten gains, plus interest and civil penalties.

Lewitas Hyman routinely represents investors harmed when financial professionals and their firms engaged in misconduct that caused their clients investment losses. Our team includes lawyers who have worked for large financial institutions, including Morgan Stanley and UBS Financial Services, and regulatory bodies such as the SEC. If you think your financial professional or firm engaged in misconduct that caused you investment losses, contact us at (888) 655 6002 or through our online contact form for a no-cost evaluation of your matter.