California DFPI and CFTC File Lawsuit Against Precious Metals Dealer for $21 Million Fraud Scheme
Bullion.Directory News 29 September, 2023
By Alison Macdonald
Commercial Editor at Bullion.Directory
The California Department of Financial Protection and Innovation (DFPI), in collaboration with the federal Commodity Futures Trading Commission (CFTC), has launched a significant legal battle against Regal Assets LLC, the Southern California-based precious metals dealer and former Bullion Dealer of the Year.
The lawsuit, filed in the United States District Court for the Central District of California, alleges a $21 million fraudulent scheme that primarily targeted retirement savings of customers nationwide.
The complaint details the activities of Regal Assets LLC, along with two principal figures, Tyler G. Gallagher and Leah Donoso. According to the lawsuit, between November 2019 and October 2022, the defendants misappropriated funds from over 120 customers across the country, engaging in the unlawful offer and sale of precious metals within California.
The heart of the lawsuit revolves around a nationwide scheme said to have been aimed at defrauding customers.
Rather than fulfilling their promise of purchasing precious metals with customer funds, the defendants are accused of diverting these funds to cover both business and personal expenses. To maintain this facade, they allegedly provided false and misleading information to their customers, deceiving them about the status of their investments.
The plaintiffs in this case are seeking a permanent injunction, full restitution, disgorgement, rescission, and civil monetary penalties. Additionally, the lawsuit calls for a jury trial to bring justice to the affected parties.
DFPI Commissioner Clothilde V. Hewlett expressed the Department’s commitment to accountability in the precious metals trading market, emphasizing the importance of safeguarding consumers’ retirement savings from unlawful and unethical practices.
Unfortunately this lawsuit is not an isolated incident. It follows a similar joint enforcement action filed in May against Red Rock Secured, LLC, and its associates, as part of ongoing efforts by the DFPI, CFTC, and other state regulators to combat fraudulent schemes in the precious metals and coin markets, particularly those targeting the elderly.
Regal Assets LLC has been involved in several legal cases in the past. One notable lawsuit was filed by American Bullion, Inc. against Regal Assets LLC and others in 2014. The case was documented in the Central District of California under case number 2:2014cv01873.
Another lawsuit was filed by Swiss America Trading Corporation against Regal Assets LLC, as recorded in case number CV 14-04960 DDP (ASx). The complaint included allegations of false and misleading advertising under the Lanham Act and state law, along with claims for unfair competition, trade libel, and intentional interference with prospective economic advantage.
These cases highlight various allegations against Regal Assets LLC, ranging from false advertising and unfair competition to direct legal action by individuals. Each case provides a glimpse into the legal challenges faced by the company over the years.
The lawsuit against Regal Assets LLC underscores the ongoing vigilance and collaborative efforts of regulatory bodies like the DFPI and CFTC in protecting consumers, particularly seniors, from fraudulent financial schemes. As the legal process unfolds, this case serves as a reminder of the need for diligence and caution in precious metals investments.
Alison Macdonald
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