SEC Charges Advisor in Self-Directed IRA Scam

The complaint further alleges that Safeguard’s sales agents used prepared scripts, some written by Santulan, that were filled with false and misleading statements.

For example, “Safeguard’s sales agents stated that a ‘Money Market Reform Law’ allowed banks and brokerage firms to freeze retirement accounts in the event of a market downturn; that top financial experts in the United States were saying that another recession was coming very soon; and that when that happened, the investors’ accounts would be frozen and they would not be able to get any money out of their 401(k) plans or Individual Retirement Accounts,” the complaint states.

These statements were misleading because, among other things, the complaint continues, “the law that Safeguard referenced applied only to money market funds in rare circumstances and could not result in an individual’s entire account being frozen.”

“The federal securities laws prohibit deceptive conduct and material misrepresentations in the purchase or sale of securities,” said Kathryn Pyszka, an associate director in the SEC’s Chicago Regional Office. “We will take action when, as alleged, parties fraudulently induce investors to sell their securities through lies and deception.”

Safeguard and Santulan also allegedly misled investors about Safeguard’s commissions and markups on the coins, charging average markups of approximately 64% on its sales of silver coins, instead of the 4% to 33% markups that they disclosed to investors.

According to the complaint, Safeguard obtained approximately $67 million from the sale of coins to more than 450 mostly older retail investors, and kept approximately $25.5 million in markups.

The SEC’s complaint, which was filed in federal district court in Los Angeles, charges Safeguard and Santulan with violating the antifraud provisions of the federal securities laws. The SEC is seeking permanent injunctions; disgorgement of allegedly ill-gotten gains, plus interest; and civil penalties.