LANSING, Mich. (WWJ) – Michigan Attorney General Dana Nessel has joined a consolidated enforcement action to "stop a fraudulent precious metals scheme" that apparently used "misleading solicitations" to obtain over $68 million in retirement funds.
The scheme involved at least 450 investors nationwide, Nessel's office said. In Michigan alone, investors turned over nearly $3 million in retirement funds to purchase precious metals from the defendants.
Nessel and her department took action alongside the Commodity Futures Trading Commission and securities regulators from 26 states.
The group filed a complaint in the U.S. District Court for the Central District of California, alleging Jeffrey Santulan and Safeguard Metals, LLC, solicited investors nationwide by touting precious metals at "grossly inflated prices that were not disclosed," Nessel's office said.
The case highlights the importance to "do your research before investing in anything," Nessel said.
The would-be investors in this case were advised they should liquidate their holdings at registered investment firms to fund investments in precious metals, bullion and bullion coins through the self-directed individual retirement accounts.
Nessel's office noted self-directed IRAs should not be confused with traditional IRAs or other retirement vehicles.
Those responsible for the scheme 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."
In many cases, officials say, 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 Michigan, investors turned over in excess of $2.8 million of their retirement funds to purchase precious metals from Safeguard Metals in the execution of this national scheme, according to Nessel's office.
Many Michigan investors liquidated their existing retirement accounts, which contained securities, to obtain funds to purchase the metals.
"Investors must be diligent in asking about the fees, markups or spreads, risks, and potential returns," Nessel said. "If the answers seem too good to be true or don't make sense, that's a sign it's not worth your money."
Any consumer complaints can be filed online through the attorney general's website. Those with questions can also call 877-765-8388.
