Business ProfileforSafeguard Metals

CFTC vs Safeguard Metals
Michigan Attorney General Dana Nessel announced that, in partnership with the U.S. Commodity Futures Trading Commission (CFTC) and 29 other state regulators, a settlement was reached with precious metals dealer Safeguard Metals, LLC and Jeffrey Ikahn to resolve a federal lawsuit. The lawsuit alleged that Safeguard and Ikahn engaged in a $68 million fraudulent scheme that targeted the elderly.  

Per the Consent Order, between October 2017 and July 2021, Safeguard and Ikahn deceived more than 450 customers nationwide into purchasing precious metals through false and misleading statements, including misrepresenting Safeguard’s and Ikahn’s credentials and the risk and safety of customer investments in traditional retirement accounts. 

Many investors in Michigan liquidated the securities that were already in their retirement accounts. In total, Michigan investors surrendered approximately $2.33 million of their retirement savings to buy metals from Safeguard.

“Michigan residents work hard to save for a comfortable retirement,” Nessel said. “Deceitfully targeting retirees for virtually worthless investments in order to generate profit is unethical and illegal. It is critically important to do research before making any investments. Ask lots of questions, and if the answers seem too good to be true, keep your money in trusted accounts.”

The order finds that the defendants charged an average markup of 51 to 71 percent on the precious metals, which was substantially more than the amounts the defendants represented in Safeguard Metals’ customer agreements as “operating margins” of 23 to 42 percent. Safeguard Metals steered over 97 percent of its sales from mostly inexperienced investors into overpriced silver coins which had significantly higher markups than gold coins and generated approximately $66 million for Safeguard.

As part of the court-approved settlement, Safeguard and Ikahn agreed not to provide unlicensed investment advice. In addition, Ikahn agreed to an order barring him from any position of employment, management, or control of any investment adviser, broker-dealer, or commodity adviser in the state of California. Further, he agreed to orders barring him from the securities industry in other states, and to a federal commodity trading ban. In the next phase of the litigation, the appropriate amount of customer restitution and civil monetary penalties will be determined.

The Department of Attorney General encourages consumers who have experienced fraudulent practices in connection with investment advisory services or the sale of commodities, and any unfair, unlawful, deceptive, and abusive practices from a financial service provider to contact the Department’s Consumer Protection Team:

SEC vs Safeguard Metals
The Securities and Exchange Commission today announced charges against Safeguard Metals LLC, and its owner, Jeffrey Santulan, for engaging in a multi-million dollar fraudulent scheme involving hundreds of investors who were at or near retirement age.

According to the SEC's complaint, from December 2017 through at least July 2021, Safeguard and Santulan acted as investment advisers 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.

As alleged, Safeguard fraudulently marketed itself as a full-service investment firm with offices in London, New York City, and Beverly Hills that employed prominent individuals in the securities industry and had $11 billion in assets under management. In reality, Santulan allegedly operated the company from a small leased space in a Woodland Hills, Calif. office building using sales agents. The complaint further alleges that Safeguard's sales agents used prepared scripts, some written by Santulan, that were filled with false and misleading statements about how the market was going to crash and how their retirement accounts would be frozen under a new 'unpublicized' law.

Safeguard and Santulan also allegedly misled investors about Safeguard's commissions and markups on the coins, charging average markups of approximately 64% on its sales of silver coins, instead of the 4% to 33% markups that they disclosed to investors. According to the complaint, Safeguard obtained approximately $67 million from the sale of coins to more than 450 mostly elderly, retail investors, and kept approximately $25.5 million in mark ups.

https://www.sec.gov/litigation/litreleases/2022/lr25322.htm