CFTC goes after fraudulent precious metals scheme Regal Assets
The Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Regal Assets LLC, Tyler G. Gallagher, and Leah Donoso.
The CFTC complaint, submitted at the California Central District Court on September 27, 2023, alleges that, beginning in at least November 2019 and continuing through at least October 2022, Regal Assets LLC, Tyler G. Gallagher, and Leah Donoso engaged in a scheme to defraud people throughout the United States, including in the California Central District District and elsewhere in California, in connection with the purchase and sale of precious metals.
During the Relevant Period, Regal Assets solicited customers to transfer funds in their tax-deferred retirement accounts, including individual retirement accounts (IRAs), 401(k) plans, and/or the U.S. Government Thrift Savings Plan (TSP), to purchase precious metals from Regal Assets through self-directed IRAs (SDIRAs). Regal Assets also solicited and accepted funds from customers to purchase precious metals using non-retirement funds.
Rather than use all of the customers’ funds for their intended purpose, Defendants misappropriated more than $21 million of the funds provided by more than 120 customers. In doing so, Defendants made knowing or reckless fraudulent misrepresentations and omissions to customers in order to conceal their misappropriation and maintain their fraudulent scheme.
The CFTC accuses the defendants of violations of: Section 6(c)(1) of the Commodity Exchange Act (“CEA”), 7 U.S.C. § 9(1), and CFTC Regulation 180.1(a)(1)-(3), 17 C.F.R. § 180.1(a)(1)-(3) (2022), and Section 29536 of the California Corporations Code.
The acts, misrepresentations, omissions, and failures of Gallagher, Donoso, and other officers, employees, and agents of Regal Assets occurred within the scope of their employment, agency, or office with Regal Assets. Therefore, Regal Assets is liable for all of these acts and practices pursuant to Section 2(a)(1)(B) of the CEA, 7 U.S.C. § 2(a)(1)(B), and CFTC Regulation 1.2, 17 C.F.R. § 1.2 (2022).
During the Relevant Period, Gallagher served as Regal Assets’ CEO, owner, and principal. In these roles, Gallagher controlled Regal Assets, directly or indirectly, and did not act in good faith or knowingly induced, directly or indirectly, Regal Assets’ conduct alleged in this Complaint. Therefore, Gallagher is liable for the acts of Regal Assets described herein pursuant to Section 13(b) of the CEA, 7 U.S.C. § 13c(b).
The CFTC seeks civil monetary penalties, restitution, and remedial ancillary relief, including but not limited to, disgorgement, rescission, pre- and post-judgment interest.