The case alleges defendants deceived elderly and retirement-age customers by inflating the price of its precious metal coins.
The Oregon Division of Financial Regulation, in partnership with the U.S. Commodity Futures Trading Commission and 29 other state regulators, announced last week it had reached a settlement with California-based Safeguard Metals LLC and its owner Jeffrey Ikahn in a federal lawsuit alleging they operated a fraudulent, $68 million silver coin scam in 30 states, including Oregon.
The lawsuit, filed in the U.S. District Court for the Central District of California in February 2022 alleged that between October 2017 and July 2021, Safeguard and Ikahn deceived 450 elderly and retirement-age customers with false and misleading statements over the value of its silver coins.
In Oregon, Safeguard and Ikahn had 11 investors, with investments totaling $2.3 million.
“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,” Oregon Division of Financial Regulation administrator T.K. Keen said in a statement. “This settlement reflects the work DFR continues to do to hold bad actors in the precious metals industry accountable to consumers.”
The settlement finds that the defendants charged an average markup of 51% to 71% on the precious metal’s value. This amount was significantly higher than the 23% to 42% markup the defendants represented in their customer agreements as “operating margins.”
The defendants agreed to the use of the consent order’s findings and conclusions in this action and any subsequent actions between the parties, neither admitting nor denying the case’s findings.
As part of the settlement, both parties agreed to a permanent injunction prohibiting them from violating several federal and state laws, commodities fraud, securities and investment adviser fraud, and providing unlicensed investment advice.
Ikahn agreed to an order barring him from any position of employment, management, or control of any investment adviser, broker-dealer, or commodity adviser in Oregon and other litigating states, as well as a federal commodity trading ban.
Safeguard and Ikahn also agreed to settle a federal lawsuit filed by the Securities and Exchange Commission alleging violations of federal securities laws. The next phase of the litigation process will focus on how much the defendants will need to pay in customer restitution and civil monetary penalties.