Department of Commerce and Consumer Affairs

DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS

DAVID Y. IGE
GOVERNOR

CATHERINE P. AWAKUNI COLÓN
DIRECTOR

TY Y. NOHARA
SECURITIES COMMISSIONER

FOR IMMEDIATE RELEASE
February 1, 2022

Department of Commerce and Consumer Affairs Partners with CFTC and
26 State Securities Regulators to Stop $68 Million Precious Metals Scheme    

HONOLULU — The Department of Commerce and Consumer Affairs (DCCA) announced today that it is participating in a consolidated enforcement action to stop a fraudulent precious metals scheme that resulted in solicitations exceeding $68 million from at least 450 investors nationwide.

The DCCA, through its Securities Enforcement Branch, has joined the Commodity Futures Trading Commission (CFTC) and 26 state securities regulators in filing a complaint in the United States District Court for the Central District of California alleging Safeguard Metals, LLC and Jeffery Santulan, AKA Jeffery Hill solicited investors nationwide by touting precious metals at grossly inflated prices that were not disclosed.

“This is one of many large-scale precious metals investment schemes we’ve endeavored to stop since the pandemic began and we are investigating numerous more precious metals investment companies on similar allegations. To prevent any further damages, investors are advised 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,” said Securities Commissioner Ty Nohara. “As the market continues to fluctuate, we anticipate seeing more fraudsters capitalize on investor’s uncertainty and use fear to manipulate good people out of their hard-earned money.”

“In expectation of additional precious metals investment schemes, investors are advised 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,” said Commissioner Nohara. “If the answers seem too good to be true or don’t make sense, protect your wallet by just walking away.”

The investors in this case were advised to liquidate their holdings at registered investment firms to fund investments in precious metals, bullion, and bullion coins through self-directed individual retirement accounts. Self-directed IRAs should not be confused with traditional IRAs or other retirement vehicles. Self-directed accounts are placed with a custodian, but do not afford the investor any protections nor provide a review of the holdings or any valuations of the holdings in the account.

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. Many investors liquidated their existing retirement accounts, which contained securities, to obtain funds to purchase the metals. 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 had liquidated to fund their purchase. In Hawaii, one investor was defrauded out of $101,577.71 in the execution of this national scheme.

The DCCA encourages investors to contact its Securities Enforcement Branch if they suspect they have been targeted by similar precious metals investment schemes. The DCCA’s Securities Enforcement Branch can be reached by telephone at (808) 586-2740 or electronic mail at [email protected].

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Media Contact:

April Rogers
Communications Officer
Department of Commerce and Consumer Affairs
Email: [email protected]