The network of lies that backed a $25 million gold scam

What does it take to pull off a $25 million gold scam?

A complaint filed last week by the Securities and Exchange Commission (SEC) details the web of alleged lies perpetrated by California-based company Safeguard Metals and its owner Jeffrey Santulan, which is accused of defrauding more than 450 mostly elderly investors, of their retirement savings.

Santulan, who the SEC accused of fraud, allegedly misrepresented his company and made false statements to investors over the past four years to paint a rosy picture of Safeguard Metals’ business and the investment proposition it offered, which turned out to be almost entirely wrong.

Santulan’s speech to investors reportedly focused on misinterpretations of a “money market reform law,” which he said would allow banks and brokerage firms to freeze individual retirement accounts during an impending recession. To maintain control of their assets, he told investors, they should sell their securities portfolios and instead invest the proceeds in gold and silver coins sold by Safeguard. While the money market reform law existit only applies to money market funds in rare circumstances and “could never cause an individual’s entire account to be frozen,” according to the SEC.

Santulan and his sales team also allegedly lied about how Safeguard was paid, particularly regarding the markups the company charged on the parts it sold. The company advertised markups between 4% and 23%, but the SEC found that Safeguard actually charged an average markup of 64%, with some markups exceeding 100%.

Safeguard reportedly earned more than $67 million from the scheme, including $25.5 million in profits, the SEC said.

According to the SEC, the sellers of Safeguard Metals further inflated their investment experience and qualifications to investors. The “closer” sales agents were reportedly touted as having decades of investment management experience, including during the Great Recession, and specializing in 401(k)s and IRAs. In truth, none of Safeguard’s employees had experience that even remotely matched that description. At least one seller, the SEC said, falsely told investors it held a Series 7 securities license from the Financial Industry Regulatory Authority.

But the alleged lies began long before investors phoned Safeguard salespeople.

The SEC alleges that Santulan used Linkedin to fake relationships between his company and senior figures in the securities industry. Safeguard Metals’ account on the business networking site, which Santulan personally managed, the SEC said, falsely identified the chairman of a major investment bank as Safeguard’s chief financial officer, and the general counsel of a large broker as Safeguard’s in-house counsel. None of these people had any relationship with Safeguard.

Santulan also reportedly represented Safeguard Metals to the investing public as an $11 billion RIA with offices in Beverly Hills, Calif., New York, New York and London. In reality, according to the SEC, Safeguard Metals “had only one office – a small rented space on the third floor of a modest office building in Woodland Hills, California.”

However, even this Woodland Hills office space appears to be a Potemkin village.

The Safeguard Metals website indicates that the company is located on the third floor of building 21550 on Oxnard Blvd. at the Warner Center business park in the West San Fernando Valley neighborhood of Woodland Hills (pictured above).

Hoping to speak with Santulan, Citywire showed up at the office unannounced. We found no trace of Safeguard Metals operations. After an unsuccessful sweep of office space on the third floor, we enlisted the help of two young receptionists for the floor’s largest tenant, coworking and “virtual office” provider Premier Workspaces. The following interaction ensued:

Citywire: Hello, I was looking for Safeguard Metals. I understand they have an office on this floor. Do you know where it could be?Receptionist 1: Oh yes. They are not there at the moment.C.W.: They are not there ? But they work here?R1: Um, no, not in this office.C.W.: But in one of those other units on this floor?Receptionist 2: They just receive mail delivered here.C.W.: Uh, okay. I’m looking for a guy named Jeffrey. Do you know him?R1: Yeah, that’s him.C.W.: Do you know where I can find it?R2: Not really, he just comes and takes things sometimes.C.W.: So Safeguard Metals doesn’t actually have any operations in this building.R2: They have another address online somewhere. We always tell people to look for that. You should be able to find it.

We later spoke with the property manager of Premier Workspaces to confirm that Safeguard Metals does not maintain office space there. In her own words, “the girls up front would know more than me.”

After some research, we found the secondary address that the receptionists were referring to. He suggested that Safeguard Metals was located inside First Financial Plaza, a large office complex along Ventura Blvd. in Encino. Again, research yielded no concrete answers. Housed in the listed office unit was California Corporate Agents, a registered agency that receives legal documents for commercial clients. Employees confirmed that Safeguard Metals was a customer but declined to release any further information.

It is possible that Santulan and Safeguard operated entirely from the home of Santulan and its vendors, using Premier Workspaces in Woodland Hills as a virtual office for mail collection, telephone services and access to meeting rooms if needed – but Citywire was unable to confirm this.

Santulan and Safeguard Metals did not respond to Citywire’s efforts to reach them. The SEC declined to comment further than the public filings.

Safeguard Metals isn’t Santulan’s only dubious business venture. Santulan is apparently co-founder of Argonaut MG, a budding film production studio that has been mentioned in several blog posts. According to poststhe Santulan-based company “just signed a $100 million+ deal with Netflix to produce 12 movies over the next three years.”

Contacted by Citywire, a Netflix rep replied: ‘We have no deal with Jeffrey Santulan or Argonaut MG. Any information to the contrary is false.’

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