A self-declared investment advisor has been charged with bilking hundreds of near-retirees out of millions of dollars by persuading them to invest in gold and silver coins, the Securities and Exchange Commission said yesterday.
Jeffrey Santulan of Tarzana, Calif., who also used the name Jeff Hill, and the company he owned and controlled, Safeguard Metals, based in Woodland Hills, Calif., allegedly sold $67 million in gold and silver coins and kept $25.5 million from the markup posted on the sales, the SEC said.
The coins, almost all of which were silver, were sold to more than 450 retail investors, most of whom were at or near retirement. Santulan acted as an investment advisor and persuaded the investors to sell their existing securities, transfer the proceeds into self-directed individual retirement accounts, and invest the money in coins. The scheme was carried out between late 2017 and July 2021, the SEC said.
Santulan and his company, the agency said, got people to invest by making false and misleading statements about the safety and liquidity of their securities investments, Safeguard’s business and its compensation. The complaint said Safeguard fraudulently marketed itself as a full-service investment firm with offices in London; New York City; and Beverly Hills, Calif. The firm also said it employed prominent individuals in the securities industry and had $11 billion in assets under management.
In reality, Santulan allegedly operated the company from a small leased space in a Woodland Hills, Calif., office building using sales agents. According to the complaint, Safeguard’s sales agents used prepared scripts, some written by Santulan, that were filled with false and misleading statements about how the market was going to crash and how investors' retirement accounts would be frozen under a new "unpublicized" law.
“Until sometime in 2020, Safeguard’s LinkedIn web page connected to several fake profiles showing links between people in the securities industry and Safeguard. For example, one LinkedIn entry falsely identified the president of a large, international investment bank as Safeguard’s CFO,” the complaint said.
“Another LinkedIn entry falsely identified the general counsel of a large, registered broker-dealer as Safeguard’s in-house attorney. In reality, neither of those individuals had any relationship with Safeguard,” according to the complaint.
Santulan was responsible for the creation of Safeguard’s website and LinkedIn page, the SEC said.
Safeguard and Santulan also allegedly misled investors about Safeguard’s commissions and markups on the coins, charging an average of approximately 64% more on its sales of silver coins, instead of the extra 4% to 33% quoted to investors, the SEC said.
“Santulan purchased all of Safeguard’s coins from a precious metals wholesaler; determined the prices at which Safeguard sold the coins to investors; and knew or was reckless in not knowing that the markups greatly exceeded the operating margin listed in the 'Precious Metals Shipping and Account Agreement' that he created, which appeared on Safeguard’s public website,” the complaint said.