The Securities and Exchange Commission has charged Safeguard Metals LLC, and its owner, Jeffrey Santulan, for engaging in an alleged multi-million dollar fraud involving more than 450 retail 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.
They allegedly charged mark-ups of approximately 64 percent on the sales of silver coins, instead of the 4 percent to 33 percent that they disclosed to investors. The firm obtained approximately $67 million from the coin sales and kept approximately $25.5 million in mark-ups, the SEC said.
Investors were reportedly targeted through Safeguard’s website, online advertisements on Facebook and Google, and direct calls. The SEC claims that firm’s LinkedIn page was also connected to fake profiles of prominent individuals in the securities industry showing that they were associated with the firm.
Safeguard marketed itself as a full-service investment firm with $11 billion in assets under management with offices in London, New York City, and Beverly Hills. In reality, the company operated its business from a small leased space in a Southern California office building using sales agents.
The SEC alleges that the sales agents used prepared scripts, some written by Santulan, that contained 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.”
The SEC’s complaint was filed in federal district court in Los Angeles and charges Safeguard and Santulan with violating the antifraud provisions of the federal securities laws. The SEC is seeking permanent injunctions, disgorgement of allegedly ill-gotten gains, plus interest, and civil penalties.