Los Angeles, CA – Sean L. Kelly, Anthony “Tony” Spencer, and Red Rock Secured, LLC have been ordered to pay nearly $56.4 million in restitution, disgorgement, and penalties for defrauding customers in a precious metals scheme, according to a consent order entered by Judge R. Gary Klausner of the U.S. District Court for the Central District of California on April 23, 2024. The Commodity Futures Trading Commission (CFTC) initially filed suit against the defendants on May 15, 2023, joined by co-plaintiffs from California and Hawaii.
The order finds Red Rock Secured and its representatives, Kelly and Spencer, liable for making fraudulent misrepresentations and providing unlawful investment advice related to the sale of precious metals between approximately November 2019 and June 2022. The defendants allegedly convinced at least 950 individuals to invest over $69 million in silver and gold Canadian Red-Tailed Hawk (RTH) coins, while secretly marking up the coins by 91.89% to 129.97% above their actual cost – a total of approximately $39 million in inflated pricing.
A significant portion of the defrauded funds came from customers utilizing tax-deferred retirement savings. The defendants allegedly misled customers by discussing low markups on common bullion products, then switching them to the more expensive RTH coins without disclosing the substantial price difference. They falsely claimed a “direct relationship” with the Royal Canadian Mint (RCM) allowed them to purchase the coins at wholesale and pass savings onto customers, when in reality they purchased the coins from a wholesaler. Furthermore, they marketed the RTH coins as “limited quantity” despite the absence of any mintage limits.
The consent order mandates the defendants collectively pay $38,984,313.90 in restitution to the victims, $5.1 million in disgorgement of ill-gotten gains, and $12.25 million in civil monetary penalties. Additionally, the order permanently bans the defendants from engaging in further violations of the Commodity Exchange Act, CFTC regulations, and relevant state laws. It also imposes permanent trading and registration bans within CFTC-regulated markets, and specifically bars Spencer and Kelly from acting as investment advisors, broker-dealers, or commodity advisors in California and Hawaii.
“The defendants preyed upon elderly victims to liquidate their retirement savings to invest in a precious metals scam,” stated Ian McGinley, Director of Enforcement at the CFTC. “The CFTC remains steadfast in ridding the precious metals industry of fraud.”
Source: CFTC.gov
Related Federal Cases
- James Seltzer, Securities Fraud Scheme, California 2024 · New Mexico
- Kenneth Ray Cleveland, Wire Fraud, California 2024 · Pennsylvania
- Robert S. Goldman, Wire Fraud, California 2024 · New Mexico
- Gregory Finkelson, Section 8 Fraud, California 2024 · New Mexico
- Rancho Santa Fe Association, PPP Loan Fraud, California 2024 · Pennsylvania
MORE FEDERAL CRIME NEWS
US NewsUS NewsUS NewsUS News