OLYMPIA – The Washington State Department of Financial Institutions (DFI) Division of Securities and the Washington State Attorney General’s Office announced their participation in a consolidated nationwide enforcement action to stop a fraudulent precious metals scheme that solicited $68 million from more than 450 customers nationwide. Many of the customers were senior investors.
“It is absolutely unconscionable when companies use deceptive sales tactics to target senior investors who have spent their lives saving for retirement,” DFI Director Charlie Clark said. “We do not take lightly the damage such companies can do, including eroding the confidence investors have in the investment industry. It is imperative these fraudulent activities be stopped immediately and investors be informed with accurate facts related to their contemplated investments prior to parting with their money.”
“These defendants thought they could prey on vulnerable Washingtonian seniors and inexperienced investors and get away with it – but they were wrong," Attorney General Bob Ferguson said. "We are standing up for retirement-age Washingtonians by holding accountable the scammers making a profit from illegal, deceptive marketing.”
On Feb. 1, 2022, Washington joined the CFTC and 26 other states (all members of the North American Securities Administrators Association or NASAA) in filing a civil complaint in the Central District Court of California against Defendants Safeguard Metals, a precious metals seller located in Woodland Hills, California, and its Managing Partner, Jeffrey Santulan, a/k/a Jeffrey Hill. The complaint alleges the defendants defrauded investors, primarily by misrepresenting or failing to disclose the exorbitant fees that were being charged to Safeguard Metals investors for their purchase of silver coins. The U.S. Securities and Exchange Commission also announced charges .
From April 2019 to May 2021, approximately 28 Washington residents invested a total of more than $5.3 million with Safeguard Metals. Nationwide, from October 2017 through January 2021, Safeguard Metals solicited approximately $68 million from more than 450 buyers who purchased precious metals. Approximately $66 million of those funds were used to purchase fraudulently priced silver coins.
Safeguard Metals charged its customers approximately $26 million in markups on the silver coin purchases. As part of the fraudulent scheme, Defendants charged fees that were almost 50% higher than the maximum fees that were disclosed to investors who purchased silver coins from Safeguard Metals. After January 2021, the defendants represented that silver coin purchasers would pay a maximum fee of 42%, yet Safeguard Metals continued to charge fees in excess of that amount.
Investors were solicited through television, radio, and social media advertisements and through cold calls that targeted elderly and inexperienced investors. Many of the investors transferred their retirement funds into a self-directed IRA account to facilitate the purchase of the silver coins that were being touted by Safeguard Metals.
If you believe that you might have been charged inappropriately high fees in connection with your purchase of silver coins from Safeguard Metals, please contact the Washington State DFI’s Securities Division at 360-902-8760.