LOS ANGELES, CA – May 15, 2023 – Federal and state regulators have filed charges against Shade-Johnson Kelly, CEO of Red Rock Secured LLC, and Anthony Spencer, a senior account executive, for allegedly defrauding customers out of $61.8 million in a nationwide precious metals scheme. The Commodity Futures Trading Commission (CFTC), along with financial regulators in California and Hawaii, filed a joint civil enforcement action in the U.S. District Court for the Central District of California.
Kelly, also known as Sean Kelly, and Spencer are accused of soliciting funds from over hundreds of customers between November 2019 and February 2022 to purchase silver and gold coins, specifically Canadian Red-Tailed Hawk (RTH) coins. Red Rock Secured, a Nevada-based company with a principal office in El Segundo, California, is also named in the complaint.
The complaint alleges that the defendants targeted funds within customers’ tax-deferred retirement accounts – IRAs, 401(k)s, and the Thrift Savings Plan – convincing them to transfer these funds to purchase the RTH coins. They also accepted funds from customers using non-retirement savings.
According to the CFTC, the defendants misled customers about the markup on the coins, claiming it would range between 4% and 29%, or even 1% to 5% in some cases. However, Red Rock routinely charged markups between 100% and 130% without disclosing the true cost to customers. The complaint further details misrepresentations regarding Red Rock’s relationships with mints, the pricing and mintage of the RTH coins, claimed bonuses and discounts, and the purported retail value of the coins.
The CFTC, the California Department of Financial Protection and Innovation (DFPI), and the Hawaii Department of Commerce and Consumer Affairs (DCCA) are seeking disgorgement of ill-gotten gains, civil monetary penalties, restitution for victims, permanent registration and trading bans, and a permanent injunction to prevent further violations of commodity exchange laws and state regulations. The total amount of penalties sought has not been specified, but reflects the $61.8 million in fraudulently obtained funds.
Both Kelly and Spencer reside in the Los Angeles area. This case highlights the ongoing efforts of the CFTC and state regulators to combat fraud within the precious metals market and protect investors from deceptive practices.
Source: CFTC.gov
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