A group of 30 U.S. state securities regulators and the federal Commodity Futures Trading Commission (CFTC) reached a settlement finding the alleged perpetrators of a US$68-million precious metals fraud liable for a scheme that targeted elderly investors.
The CFTC and the North American Securities Administrators Association (NASAA) announced that an order was entered, on consent, in the U.S. District Court for the Central District of California against Safeguard Metals LLC and Jeffrey Ikahn finding them liable for operating a fraudulent scheme that sold overpriced silver coins to older investors.
The order finds that the scheme involved deceiving customers into purchasing precious metals through false and misleading statements, including about the risk of their investments in traditional retirement accounts. The coins were also sold with large markups, which caused investors to suffer large, immediate losses.
“The defendants targeted elderly victims to liquidate their retirement savings to invest in a precious metals scam,” said CFTC director of enforcement Ian McGinley in a release.
The order finds the defendants liable for fraud and enjoins them from future violations while reserving a decision on restitution, disgorgement and monetary penalties by the court or by consent.
The U.S. Securities Exchange Commission (SEC) previously filed a civil action against Safeguard Metals and Ikahn for securities violations stemming from the scheme and for providing unlawful investment advice.
In June, the SEC entered a similar consent order with the defendants where they admitted liability, prohibited further violations and left disgorgement and penalties to be determined at a later date.
“Working closely with the 30 state co-plaintiffs, this resolution as to liability is a critical step in addressing the defendants’ fraud,” McGinley said.