At least half a dozen investors in Arkansas were among about 450 nationwide defrauded in a $68 million precious metals scheme, state and federal regulators say.
Safeguard Metals LLC of Woodland Hills, California, targeted older investors and sold them gold and silver coins at grossly inflated prices, according to a complaint filed in U.S. District Court by the federal Commodity Futures Trading Commission.
The complaint, joined by the Arkansas Securities Department and 26 other state regulatory agencies, alleges that the company convinced many investors to liquidate their retirement accounts to purchase the metals.
Investors in Arkansas lost more than $2 million.
Company owner Jeffrey Hill, also known as Jeffrey Santulan, is listed as a defendant in the lawsuit. He had not filed a response Wednesday.
The complaint alleges that the company marketed the metals as being rare, limited in availability and high in demand, then charged customers a markup on silver coins that exceeded the maximum possible markup disclosed to customers by almost 50% on average.
More: Read the complaint here.
After being notified that authorities were investigating, the company continued charging customers a markup that exceeded the maximum disclosed to customers by an average of nearly 10%, the complaint says.
Safeguard Metals is also accused of lying to customers about the risk and safety of their traditional retirement accounts “in order to instill fear and convince customers to purchase Precious Metals.” It also allegedly misrepresented the size, experience, background and history of the firm.
“The Defendants failed to disclose that almost every investor lost a significant amount of their funds in the precious metals the firm was offering,” Arkansas Securities Commissioner Eric Munson said in a news release. “Arkansas investors suffered deep losses, often from savings and retirement accounts, after relying on false promises made by Safeguard’s sales representatives.”
The lawsuit seeks an injunction halting the company’s activities, along with civil monetary penalties to be assessed by the court and restitution for the victims.
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