CFTC and California DFPI Unite to Charge Precious Metals Dealer in $21 Million Fraudulent Scheme

In a joint effort to combat financial fraud, the Commodity Futures Trading Commission (CFTC) and the California Department of Financial Protection & Innovation (DFPI) have filed a civil enforcement action against precious metals dealer Regal Assets LLC, its CEO Tyler G. Gallagher, and former President Leah Donoso. The charges allege that the defendants were involved in a nationwide fraudulent scheme that misappropriated over $21 million from unsuspecting victims.

The complaint, filed in the U.S. District Court for the Central District of California, accuses Regal Assets, Tyler G. Gallagher, and Leah Donoso of misappropriating customer funds, primarily from tax-deferred retirement accounts, to purchase precious metals. Regal Assets, headquartered in Beverly Hills, California, and with a second office in Waco, Texas, targeted customers nationwide. While Gallagher's last known residence was in the Los Angeles area, Donoso currently resides in Texas.

The CFTC and the DFPI are pursuing a range of remedies in their ongoing litigation, including the disgorgement of ill-gotten gains, civil monetary penalties, restitution to victims, permanent registration and trading bans, and a permanent injunction against further violations of the Commodity Exchange Act (CEA), CFTC regulations, and state law.

Case Background

The alleged fraudulent activities occurred between November 2019 and October 2022. During this period, Regal Assets is said to have engaged in deceptive practices involving the sale of precious metals. The company solicited customers to transfer funds from their tax-deferred retirement accounts, including IRAs, 401(k) plans, and U.S. Government Thrift Savings Plans, to invest in precious metals via self-directed IRAs. Additionally, Regal Assets accepted funds from customers for the same purpose.

Rather than utilizing the customer funds for the intended purpose of purchasing precious metals, the defendants are accused of misappropriating more than $21 million from over 120 customers. The complaint asserts that the defendants knowingly or recklessly made fraudulent misrepresentations and omissions to customers, which included using forged documents to conceal their actions and sustain their fraudulent scheme.

Furthermore, the complaint alleges that customer funds were diverted to cover Regal Assets' operational expenses, salaries, and bonuses for Gallagher and Donoso, including substantial sums spent on precious metals. Additional misappropriation included funding Gallagher's competitive video gaming business and purchasing a multi-million-dollar Beverly Hills residence. The defendants are also accused of using customer funds to pay down loans exceeding $6 million and making Ponzi-like payments to older customers with new customer funds.

The CFTC expresses its gratitude to the DFPI for its collaboration in this enforcement action.

CFTC's Precious Metals Customer Fraud Advisory

The CFTC has issued various customer protection Fraud Advisories and Articles, including the Precious Metals Fraud Advisory. These resources provide valuable information to help individuals recognize, avoid, and report scams related to precious metals trading.

The CFTC strongly encourages the public to verify a company's registration with the CFTC before committing funds. If a company is unregistered, customers should exercise caution before entrusting them with their finances. Information about a company's registration status can be found using NFA BASIC.

This joint action by the CFTC and the California DFPI underscores their commitment to protecting consumers and maintaining the integrity of financial markets. It serves as a warning to those who would engage in fraudulent schemes that their actions will not go unchecked.