In a joint effort with the U.S. Commodity Futures Trading Commission (CFTC) and 29 other state regulators, the Washington State Department of Financial Institutions (DFI) has reached a settlement in a federal lawsuit against precious metals dealer Safeguard Metals, LLC, and its owner Jeffrey Ikahn.
The lawsuit, filed in February 2022 in the United States District Court for the Central District of California, alleged that Safeguard Metals and Ikahn were involved in a fraudulent scheme that targeted the elderly, resulting in losses of approximately $68 million, according to the Complaint for Injunctive Relief filed by CFTC together with DFI and the participating state regulators.
Between October 2017 and July 2021, Safeguard and Ikahn allegedly engaged in deceptive practices that affected more than 450 customers nationwide by enticing customers to purchase precious metals through false and misleading statements, which included misrepresenting their credentials and the risks associated with investments in the elderly customers’ traditional retirement accounts.
DFI Director Charlie Clark stated that "Safeguard Metals engaged in fraudulent and deceptive practices to solicit millions of dollars, primarily from elderly and retirement-aged individuals for profit. As a result, customers suffered substantial losses on their retirement investments".
In partnership with the CFTC and other state regulators, the settlement is part of DFI's ongoing efforts to protect consumers and hold bad actors in the precious metals industry accountable for their actions.
The order also revealed that the defendants charged an average markup of 51 to 71 percent on the precious metals, significantly higher than the 23 to 42 percent markups represented in Safeguard Metals' customer agreements as "operating margins."
Safeguard Metals directed over 97 percent of its sales from largely inexperienced investors into overpriced silver coins, resulting in substantial profits for the company.
As part of the court-approved settlement, Safeguard Metals has agreed to a permanent injunction that prohibits the company from violating several federal and state laws, including those related to commodities fraud, securities and investment adviser fraud, and providing unlicensed investment advice.
The next phase of litigation will determine the appropriate amount of customer restitution and civil monetary penalties.
Furthermore, Safeguard Metals has settled a federal lawsuit filed by the Securities and Exchange Commission (SEC) alleging violations of federal Securities Laws.
Another recent fraud incident implicated suspects who posed as federal agents in calls to victims in which the suspects alleged that drugs and money connected to the victim’s name had been intercepted at the border. Victims were repeatedly solicited for money, reportedly for “safeguarding” and for court proceedings related to the false charges.
Thurston County Sheriff’s Office (TCSO) and local police agencies warned the public about the fraud scheme, advising that “no government agency will ask or demand money via phone, cell phone apps, or any other informal communication”.
Local agencies urge the public to contact authorities immediately if fraudulent activity is encountered or suspected.
For TCSO, contact dispatch at 360-704-2740 or via email to report any incidents and seek assistance.
Lacey residents may also fill out their fraud/identity theft form here.
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