CFTC Regulator and 30 States Act Against Safeguard Metals in $68M Fraud Case

The Commodity Futures Trading Commission (CFTC) and 30 state securities regulatory bodies have announced a joint action against Safeguard Metals LLC and its associated figure, Jeffrey Ikahn (formerly known as Jeffrey Santulan a/k/a Jeffrey Hill). The consent order accuses the company and Ikahn of perpetrating a vast $68 million fraud, primarily centered on the deceptive sale of overpriced silver coins, predominantly targeting the elderly and those in retirement.

Details of the Fraudulent Scheme

Between October 2017 and July 2021, Safeguard Metals and Ikahn reportedly solicited approximately $68 million from investors. The majority of these funds came from about 450 individuals, mostly comprising their retirement savings, intending to buy precious metals, with silver coins being the primary item of sale.

The consent order highlights that the accused manipulated customers into buying these precious metals by making misleading statements.

These included false information about traditional retirement account risks and investment safety. Notably, customers were deceived into paying for silver coins at exorbitant markups, significantly higher than the agreed-upon prices. An illustration of this deceit is evident in the fact that while customer agreements stated a maximum markup of 23% on silver coins, they were charged an average markup of 71%. Such unjustifiable markups meant customers incurred significant and immediate losses on their investments. Moreover, the accused reportedly misled customers about the real value of their purchased silver coins to further cover up their deceptive practices.

Parallel Action by the SEC

In a related development earlier this year, the Securities Exchange Commission (SEC) took separate civil action against Safeguard Metals and Ikahn. This action pertained to the fraudulent precious metals scheme, particularly the overpriced silver coins, and the provision of unlawful investment advice. On June 14, the SEC too acquired a similar consent order in which the defendants acknowledged their liability.

The CFTC and the North American Securities Administrators Association (NASAA) have expressed gratitude towards the SEC for its collaboration and support.

State Collaboration

State regulatory agencies from across the country, including the California Department of Financial Protection & Innovation, Alabama Securities Commission, and others, joined the CFTC as co-plaintiffs in this matter. Their collective effort was pivotal in bringing this case to the current juncture.

A Call to Vigilance

Both the CFTC and NASAA have consistently issued advisories urging customers to be cautious of potential precious metals fraud. They advocate for the public to always verify a company's registration status with the CFTC before investing any funds. The CFTC also provides channels for the public to report suspicious activities or potential breaches of commodity trading laws.

NASAA, on the other hand, has resources like the Senior Investor Resource Center, aimed at helping older investors guard against potential investment frauds. They too emphasize the importance of verifying the credibility of any investment opportunity or salesperson before making any investments.

Another CFTC news:

CFTC Takes Action Against Technical Trading Team, LLC For $5 Million Forex Scheme

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News 2023-10-09

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In conclusion, while this consent order represents a significant step towards justice for the victims of this scheme, it also serves as a cautionary tale underscoring the importance of due diligence and vigilance in investment decisions.