The Arizona Corporation Commission announced today that it is participating in a multijurisdictional, coordinated enforcement action to stop a fraudulent precious metals scheme that resulted in investments exceeding $68 million from at least 450 investors nationwide.
The Corporation Commission has joined the Commodity Futures Trading Commission (CFTC) and 26 other state securities regulators in filing a complaint in the United States District Court for the Central District of California alleging Safeguard Metals, LLC and Jeffrey Santulan, a/k/a Jeffrey Hill solicited investors nationwide by touting precious metals at grossly inflated prices that were not disclosed.
The Corporation Commission is urging investors to be particularly cautious when purchasing precious metals and to check for outrageously high commissions, spreads, or markups as high as 30 to 70 percent. The investors in this case were advised by the fraudsters to liquidate their holdings at registered investment firms to fund investments in precious metals, bullion, and bullion coins through self-directed individual retirement accounts (IRAs). Self-directed IRAs should not be confused with traditional IRAs or other retirement vehicles.
With the expectation of additional precious metals investment schemes, the Corporation Commission is urging investors to check the registration of all investment products and professionals, diligently research investments, ask tough questions about the fees, markups or spreads, risks, and potential returns. If the answers seem too good to be true or don’t make sense, protect your wallet by just walking away.
The defendants are accused of failing to disclose the markup charge for their precious metals bullion products and that investors could lose the majority of their funds once a transaction was completed. In many cases, the market value of the precious metals sold to investors was substantially lower than the value of the securities and other retirement savings investors liquidated to fund their purchase. In Arizona, 14 investors were defrauded out of more than $1,033,898 in this nationwide scheme.