Kentucky residents lose $600,000 in alleged silver coin scam
Nine Kentucky residents lost a total of more than $600,000 in an alleged scheme to fraudulently market silver coins, state officials said.
The people are part of a case in which federal regulators accused a California firm of using lies and misleading information to trick people, mostly seniors, into investing in silver at an exorbitant markup .
Kentucky residents, including four retirees, lost $616,428 in the scheme, Gov. Andy Beshear said in a news release.
“The victims thought they were investing their retirement funds to meet their future needs. In reality, they got caught up in another investment fraud, which has increased dramatically during the pandemic (COVID-19),” Beshear said.
The U.S. Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission this week filed lawsuits in federal court in California against Safeguard Metals LLC and its owner, Jeffrey Santulan, also known as by Jeffrey Hill.
Kentucky’s Department of Financial Institutions joined the commission and 26 other states in one of the complaints, which seeks restitution for people who invested.
According to an association of securities administrators, state regulators have seen an increase in suspected fraudulent investment schemes linked to gold or silver coins and targeting senior citizens.
Safeguard Metals received a total of $67 million from the sale of parts to more than 450 people across the country, according to a court document.
Federal regulators said Santulan and Safeguard employees used false and misleading claims to convince people to sell their existing securities and use the money to buy silver and gold coins.
For example, company sales agents told people that a federal law allows banks and brokerage firms to freeze their existing 401(k) accounts and individual retirement accounts (IRAs) during a stock market downturn. .
However, the law cited by officers only applied to money market accounts in rare circumstances and did not allow freezing an entire account, according to court documents.
The company also told investors that its markup on coins typically ranges from 4% to 23% depending on the product, while Safeguard actually charges an average markup of 64% on silver coins, the SEC said.
At one point, the company and its agents claimed it managed $11 billion in assets and had offices in New York, Beverly Hills and London.
In fact, he had sold for less than $75 million worth of pieces and had only one office, a small rented space on the third floor of a building in Woodland Hills, Calif., federal regulators said.
People who purchased coins from the company “generally and almost immediately incurred substantial losses on their investments due to the fraudulently overpriced coins,” the Commodity Futures Trading Commission charged.
Kentucky officials said the Safeguard Metals case is one of several investment schemes they have tried to shut down, and others are under investigation.
“As the market continues to fluctuate, we expect to see more fraudsters attempting to capitalize on investor uncertainty and using fear to manipulate people with their hard-earned money,” said Marni R. Gibson, director of division at the State Department of Financial Institutions.
Gibson said investors should be especially careful when buying precious metals and should check for high commissions.
Individuals who suspect they have been targeted in a similar precious metals investment scheme can contact the department at 502-573-3390 or [email protected]