It’s a story that has become too common: An investor, often retired, transfers a big chunk of their 401(k) or IRA to buy gold and in doing so ends up losing a lot of money.
A new lawsuit from California and the Commodity Futures Trading Commission comes with a grim twist: Tens of millions of dollars worth of clients’ assets are missing — not because they were overcharged or bought worthless products — but because a large portion of theirr retirement funds was allegedly misappropriated to finance luxury cars, a house in Beverly Hills and an outlandishly big esports team.
The company at the center of the fraud, Regal Assets, went dark nearly a year ago. And its owner, Tyler Gallagher, appears to have fled the country.
That’s according to the lawsuit filed Wednesday by California’s Department of Financial Protection and Innovation and the CFTC, which names former company president Leah Donoso as a defendant along with Regal Assets and Gallagher.
The allegations point to a Ponzi scheme in an industry that, as a result of myriad instances of older people being targeted for questionable or unsuitable products, has a public relations problem.
Last month, for example, a group of states approved a bankruptcy plan for precious metals firm Lear Capital that includes $5.5 million in restitution for thousands of clients who moved money out of retirement accounts and incurred high fees for exposure to gold. And recently the CFTC filed enforcement actions against firms that pushed gold coins with inflated values on vulnerable buyers who cashed out of IRAs.
Along with regulators, financial advisors have cautioned about investing in gold and especially about using retirement assets to buy purportedly rare coins or physical gold with
Read more on investmentnews.com