U.S. regulators accuse company of fraudulently selling coins from Royal Canadian Mint

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The Commodity Futures Trading Commission alleges Red Rock Secured LLC falsely told customers it had a ‘direct relationship’ with the Royal Canadian Mint

U.S. regulators are suing a California company, its chief executive officer and two of its former employees, alleging they participated in a fraudulent scheme to convince customers to cash out their retirement investments and buy millions of dollars of Royal Canadian Mint coins at large markups.

In its court filing, the CFTC says Red Rock collected US$61.8-million from more than 950 customers who bought red-tailed hawk coins, beginning no later than November, 2019, and ending no earlier than February, 2022. The company charged about US$34.4-million in markups, the regulator alleges.Michael Schafler, a lawyer who represents the company and its CEO, Sean Kelly, said in an e-mailed statement that Red Rock “has been completely cooperative.

The CFTC says the wholesaler advised Red Rock that there was no mintage limit on the red-tailed hawk coins, which meant the Royal Canadian Mint would produce as many of the coins as Red Rock could sell. The CFTC says that despite this, Red Rock “misleadingly classified and promoted the silver and gold RTH coins as ‘monetized bullion .’”

The SEC alleges about 700 Red Rock customers transferred about US$50-million to the new accounts to purchase coins., the SEC says Red Rock targeted participants in the Thrift Savings Plan for federal employees, including military members, falsely claiming that all their investment options available within the plan were equity funds.

 

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