FRANKFORT, KY (WOWK) – The Kentucky Department of Financial Institutions announced today that it has joined the Commodity Futures Trading Commission along with 26 other states in “coordinated enforcement action.”
The Kentucky DFI says the agencies worked to stop a fraudulent precious metals scheme that targeted senior investors. The agencies said at least 450 people across the country have invested more than $68 million in the program.
According to Kentucky Governor Andy Beshear, the victims include nine Kentuckians, including four retirees, who lost a total of $616,248 in the scheme.
“The victims thought they were investing their retirement funds to meet their future needs. In reality, they got caught up in another investment fraud, which has increased dramatically during the pandemic,” Beshear said.
The Kentucky IFD, the CFTC and other state securities regulators filed a lawsuit in the United States District Court for the Central District of California alleging that Safeguard Metals, LLC and Jeffery Santulan, also known as Jeffery Hill, solicited investors. across the country by “boasting precious metals at grossly inflated prices that have not been disclosed”.
“This is one of many large-scale precious metals investment programs that we have tried to shut down since the start of the pandemic, and we are investigating other similar cases,” Marni said. R. Gibson, director of the securities division of DFI. “As the market continues to fluctuate, we expect to see more fraudsters attempting to capitalize on investor uncertainty and using fear to manipulate people with their hard-earned money.”
Kentucky IFD says defendants are accused of failing to disclose mark-up fees for precious metals bullion products and failing to disclose that investors could lose most of their funds once the transaction is completed .
In many cases, investors have been advised to liquidate their holdings with “registered investment companies” in order to purchase the precious metals, bullion or bullion coins “through self-directed Individual Retirement Accounts “. Experts say a self-directed IRA, which allows the investor to make alternative investments for their retirement savings, should not be confused with traditional IRAs or other retirement vehicles.
The Kentucky IFD and CFTC also say that in many instances of this scheme, the market value of those precious metals that were sold to investors was “significantly less” than the value of the securities and other retirement savings they have sold out to buy them.
“We expect to see more precious metals investment programs,” said Chad K. Harlan, director of DFI’s Securities Enforcement Branch. “Investors should verify the registration of all investment products and professionals; diligently seek out investments; and ask tough questions about fees, mark-ups or spreads, risks and potential returns. If the answers sound too good to be true or don’t make sense, protect your wallet by simply walking away.
Gibson says investors looking to buy precious metals should be especially careful, and some ways to check for possible fraud are outrageously high commissions, spreads or markups of up to 30% to 70%.
Kentucky FDI, any investors who believe they have been targeted by similar precious metals investment programs should contact the department’s Division of Securities’ Enforcement Branch at 502-573-3390 or [email protected] .