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JAMES HOLL (CA Bar No. 177885) 

jholl@cftc.gov 

COMMODITY FUTURES TRADING COMMISSION 

1155 21st Street, N.W. 

Washington, DC 20581 

(202) 418-5311 / (202) 818-3117 (fax) 

LOCAL COUNSEL: 

DANIELLE A. STOUMBOS (CA Bar No. 264784) 

Danielle.Stoumbos@dfpi.ca.gov 

CALIFORNIA DEPARTMENT 

OF FINANCIAL PROTECTION & INNOVATION 

320 West Fourth Street, Suite 750 

Los Angeles, California 90013 

(213) 503-2046 / (213) 576-7181 (fax)

THE UNITED STATES DISTRICT COURT 

FOR THE CENTRAL DISTRICT OF CALIFORNIA 

COMMODITY FUTURES 

TRADING COMMISSION, 

CALIFORNIA DEPARTMENT OF 

FINANCIAL PROTECTION & 

INNOVATION, and STATE OF

HAWAII, DEPARTMENT OF 

COMMERCE AND CONSUMER 

AFFAIRS, SECURITIES 

ENFORCEMENT BRANCH, 

Plaintiffs, 

v. 

RED ROCK SECURED, LLC, and 

SHADE JOHNSON-KELLY a/k/a 

SEAN KELLY, and ANTHONY 

SPENCER, 

Defendants. 

 

 

Civil Action No. 2:23-CV-03680 

COMPLAINT FOR INJUNCTIVE 

RELIEF, CIVIL MONETARY 

PENALTIES, AND OTHER 

EQUITABLE RELIEF 

DEMAND FOR JURY TRIAL 

Case 2:23-cv-03680 Document 1 Filed 05/15/23 Page 1 of 58 Page ID #:1
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Plaintiffs Commodity Futures Trading Commission (“CFTC” or 

“Commission”), California Department of Financial Protection & Innovation 

(“DFPI”), and State of Hawaii, Department of Commerce and Consumer Affairs, 

Securities Enforcement Branch (“SEB”) (hereinafter the DFPI and SEB are referred 

to collectively as “the States”), by and through their undersigned attorneys, hereby 

allege as follows: 

I. SUMMARY 

1. From at least November 2019 and continuing through at least February 

2022 (“Relevant Period”), Red Rock Secured, LLC (“Red Rock”), Shade JohnsonKelly a/k/a Sean Kelly (“Kelly”), and Anthony Spencer (“Spencer”) (collectively 

“Defendants”) engaged in a scheme to defraud people throughout the United States, 

including in this District, in California, and in Hawaii. 

2. Defendants made knowing or reckless misrepresentations and omissions 

to prospective and existing customers intended to induce them to purchase precious 

metals from Red Rock, in particular silver and gold Canadian Red-Tailed Hawk 

(“RTH”) coins. Defendants knowingly or recklessly misled these customers into 

believing that Red Rock’s mark-up on these coins—i.e., the difference between what 

Red Rock paid to acquire the RTH coins and the price Red Rock charged its 

customers for those coins—would fall between either 4% to 29% or, in some 

instances, 1% to 5%. In reality, Red Rock routinely and repeatedly charged mark-ups 

ranging from approximately 100% to 130% on the RTH coins, and did not tell 

customers the actual mark-ups charged. 

3. Defendants’ misrepresentations and omissions also pertained to, among 

other things: Red Rock’s relationship with various mints, in particular the Royal 

Canadian Mint (“RCM”) which produced the RTH coins; pricing and mintage of the 

RTH coins; “bonuses” and “discounts” purportedly offered to Red Rock’s customers; 

and the purported “retail/market value” of the customers’ RTH coin purchases. 

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4. During the Relevant Period, Defendants convinced hundreds of 

customers to transfer funds in their tax-deferred retirement accounts, including 

individual retirement accounts (“IRAs”), 401(k) plans, and the U.S. Government 

Thrift Savings Plan (“TSP”), and use those funds to purchase precious metals from 

Red Rock through self-directed IRAs (“SDIRAs”). Defendants also solicited and 

accepted funds from hundreds of customers to purchase precious metals from Red 

Rock using non-retirement funds. 

5. As a result of the misrepresented and undisclosed mark-ups Red Rock 

charged on the RTH coins, customers generally and almost immediately suffered 

substantial losses on their purchases. During the Relevant Period, Defendants 

fraudulently solicited approximately $61.8 million from approximately 959 

customers for the purchase of RTH coins. Red Rock charged its customers 

approximately $34.4 million in mark-ups on those purchases, as part of Defendants’ 

fraudulent scheme. 

6. In an effort to conceal and perpetuate Red Rock’s fraud, Defendants also 

misled customers about the value of the RTH coins they purchased by falsely 

claiming, inter alia, that the “retail/market value” of the coins was far higher than 

their precious metal content. In addition, Spencer provided customers with periodic 

updates in which he represented that the “current retail value” of the customers’ 

precious metal was based on data provided to Red Rock by the RCM when, in fact, 

the RCM did not provide any such data to Red Rock. 

7. By virtue of this conduct, and as more fully set forth below, Defendants 

have engaged, are engaging, and/or are about to engage in 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); Sections 25230, 

25235, and 29536 of the California Corporation Code; and Sections 485A-501(a)(2) 

and 485A-603.5 of the Hawaii Revised Statutes. 

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8. The acts, misrepresentations, omissions, and failures of Kelly, Spencer, 

and other officers, employees, and agents of Red Rock occurred within the scope of 

their employment, agency, or office with Red Rock. Therefore, Red Rock 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). 

9. During the Relevant Period, Kelly served as Red Rock’s chief executive 

officer. In that role, Kelly controlled Red Rock, directly or indirectly, and did not act 

in good faith or knowingly induced, directly or indirectly, Red Rock’s conduct 

alleged in this complaint. Therefore, Kelly is liable for the acts of Red Rock 

described herein pursuant to Section 13(b) of the CEA, 7 U.S.C. § 13c(b). 

10. Accordingly, pursuant to Sections 6c and 6d(1) of the CEA, 7 U.S.C. 

§§ 13a-1, 13a-2(1), the CFTC and the States bring this action to enjoin Defendants’ 

unlawful acts and practices, to compel their compliance with the CEA and CFTC 

Regulations, and to enjoin them from engaging in any commodity-related activity, as 

set forth below. The States separately allege violations of state law based on the 

conduct described herein. Plaintiffs also seek civil monetary penalties and remedial 

ancillary relief, including, but not limited to, restitution, disgorgement, rescission, 

pre- and post-judgment interest, and such other relief as the Court may deem 

necessary and appropriate. 

II. JURISDICTION AND VENUE 

11. This Court has subject matter jurisdiction over this action under 28 

U.S.C. § 1331 (federal question jurisdiction) and 28 U.S.C. § 1345 (district courts 

have original jurisdiction over civil actions commenced by the United States or by 

any agency expressly authorized to sue by Act of Congress). Section 6c(a) of the 

CEA, 7 U.S.C. § 13a-1(a), authorizes the CFTC to seek injunctive and other relief 

against any person whenever it appears to the CFTC that such person has engaged, is 

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engaging, or is about to engage in any act or practice constituting a violation of any 

provision of the CEA or any rule, regulation, or order thereunder. 

12. Section 6d(1) of the CEA, 7 U.S.C. § 13a-2(1), authorizes the States to 

bring a suit in the district courts of the United States to seek injunctive and other 

relief against any person whenever it appears to the Attorney General and/or 

Securities Administrator of a State, or such other official that a State may designate, 

that the interests of the residents of the State have been, are being, or may be 

threatened or adversely affected because of violations of the CEA or CFTC 

Regulations. The acts and omissions in violation of the CEA occurred within each of 

the States. Customers from both States were materially and substantially harmed by 

Defendants’ violations of the CEA, CFTC Regulations, and various provisions of 

California and Hawaii state law. 

13. This Court has supplemental and pendent jurisdiction over the State-law 

claims of the States pursuant to 28 U.S.C. § 1367(a). 

14. Venue lies properly in this District pursuant to Section 6c(e) of the CEA, 

7 U.S.C. § 13a-1(e), because Defendants transacted business in this District, and 

certain transactions, acts, practices, and courses of business in violation of the CEA 

and CFTC Regulations occurred, are occurring, or are about to occur within this 

District, among other places. 

III. PARTIES 

A. Plaintiffs 

15. Commodity Futures Trading Commission is the independent federal 

regulatory agency charged by Congress with the administration and enforcement of 

the CEA and CFTC Regulations promulgated thereunder. The CFTC maintains its 

principal office at Three Lafayette Centre, 1155 21st Street NW, Washington, D.C. 

20581. 

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16. California Department of Financial Protection and Innovation: 

Headed by a Commissioner, the DFPI has jurisdiction over (i) the offer and sale of 

commodities and commodity contracts in California under the California Commodity 

Law of 1990 (“CCL”) (Cal. Corp. Code § 29500-29567); (ii) investment advisers 

under the Corporate Securities Law of 1968 (“CSL”) (Cal. Corp. Code § 25000-

25707); and (iii) the offer and sale of securities under the CSL. The Commissioner of 

the DFPI is the California securities administrator. The DFPI maintains its principal 

office at 2101 Arena Boulevard, Sacramento, California 95834. 

17. State of Hawaii, Department of Commerce and Consumer Affairs, 

Securities Enforcement Branch: The Commissioner of Securities, by and through 

the Securities Enforcement Branch, is vested with the authority to administer and 

enforce the provisions of Chapter 485A of the Hawaii Revised Statutes, known as the 

Uniform Securities Act (2002), and the rules adopted and orders issued 

thereunder. The SEB’s office is located at 335 Merchant Street, Room 205, 

Honolulu, Hawaii 96813.

B. Defendants 

18. Red Rock Secured, LLC is a Nevada limited liability company formed 

on January 12, 2010. On November 4, 2016, Red Rock registered with the California 

Secretary of State as a foreign limited liability company, with its principal office 

located at 898 N. Pacific Coast Highway, Suite 440, El Segundo, California. Red 

Rock has never been registered in any capacity with the Commission, the DFPI, or 

the Hawaii Commissioner of Securities. 

19. Shade Johnson-Kelly a/k/a Sean Kelly is Red Rock’s President and 

Chief Executive Officer (“CEO”). Kelly is one of two signatories on Red Rock’s 

bank accounts. During the Relevant Period, Kelly held an 80% ownership share in 

Red Rock, controlled its day-to-day operations, supervised (directly and indirectly) its 

employees and agents, and made hiring and firing decisions on behalf of the 

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company. Kelly has never been registered in any capacity with the Commission, the 

DFPI, or the Hawaii Commissioner of Securities. Kelly resides in Los Angeles, 

California.

20. Anthony “Tony” Spencer was a Senior Account Executive at Red 

Rock during part of the Relevant Period. During at least a portion of the Relevant 

Period, Spencer served as Red Rock’s Director of Account Services. Spencer has 

never been registered in any capacity with the Commission, the DFPI, or the Hawaii 

Commissioner of Securities. Spencer resides in Los Angeles, California. 

IV. FACTS 

A. Overview: Red Rock Defrauded Customers Through 

Misrepresentations and Omissions About the RTH Coins 

21. As alleged in detail in Sections G through J below, Defendants 

defrauded customers through a series of misrepresentations. Most egregiously, 

Defendants grossly misrepresented to customers the mark-up Red Rock would charge 

on the RTH coins, while omitting to tell them the actual mark-ups Red Rock charged. 

Defendants also misrepresented Red Rock’s relationship with the RCM, as well as 

the pricing and mintage of the silver RTH coin. In addition, Spencer misrepresented 

discounts and bonuses purportedly granted to customers. Finally, Defendants 

misrepresented the “retail/market value” or “current retail value” of customers’ RTH 

coins.

22. Language in the “Transaction Agreement” Red Rock provided to 

customers advised that for certain “premium” precious metals, including the RTH 

coins, “[t]he difference between the Purchase Price Client pays for Products under a 

Purchase Order and the price that Red Rock actually pays for the Products purchased 

by Client under such Purchase Order” ranged from 4% to 29%. In reality, Red Rock 

routinely charged mark-ups of between approximately 100% and 130% on the RTH 

coins. 

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23. At Defendants’ suggestion, the vast majority of its customers purchased 

RTH coins, which Red Rock advertised as “premium products” rather than “common 

bullion” products. Despite this fact, when asked about Red Rock’s charges or markup, Red Rock sales personnel, including Spencer, routinely told customers that Red 

Rock charges 1% to 5 % “above our costs on common bullion” products. In reality, 

as noted above, Red Rock charged vastly higher mark-ups on the RTH coins.

24. To create the illusion of a pricing advantage to the customers, Red Rock 

sales personnel routinely told customers that Red Rock had a “direct relationship” 

with the RCM and could, therefore, “pass the savings” on to Red Rock’s customers. 

Spencer also told customers that the RCM set the price of the RTH coins. These 

statements were false. Red Rock did not have a direct relationship with the RCM and 

it was Kelly, not the RCM, who determined the prices of the RTH coins. In addition, 

Spencer also routinely told customers that they were paying “discounted” prices or 

receiving “bonus” metal. In reality, most customers received no or minimal discounts 

or bonuses.

25. To further foster the illusion of value in the RTH coins, Spencer told at 

least one customer that the RTH coins were of limited mintage. In fact, there was no 

mintage limit. To that same end, Defendants represented that the RTH coins 

possessed value substantially beyond their metal content. In reality, both the “true 

retail/market value” touted by Red Rock and, to an even greater degree, the “current 

retail value” updates provided by Spencer, substantially overstated the actual value of 

the RTH coins.

26. Immediately below, the allegations of Sections B through F put 

Defendants’ fraudulent misrepresentations and omissions in context by detailing Red 

Rock’s precious metals business, sales pitch, products, pricing, and the origin of the 

RTH coins, as well as Red Rock’s RTH commission and sales figures. 

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B. Red Rock’s Precious Metals Business 

27. Red Rock is a precious metals retailer, meaning it sells various types of 

precious metals products (e.g., bars, rounds, and coins) directly to members of the 

public. 

28. Precious metals are commodities under Section 1a(9) of the CEA, 7 

U.S.C. § 1a(9). 

29. Typically, coins are produced by a mint which sells them to precious 

metals distributors. The distributors, in turn, sell the coins to precious metals 

wholesalers. The precious metals wholesalers then sell the coins to precious metals 

retailers, such as Red Rock. Each of these transactions includes a mark-up charged 

by the seller.

30. During the Relevant Period, Red Rock purchased all of its precious 

metals products from a single wholesaler (“Wholesaler 1”). Red Rock has never 

purchased coins or other precious metals products directly from the RCM or any 

other mint.

31. For customers using tax-deferred or other retirement funds to purchase 

precious metals, Red Rock followed a three-step process: First, Red Rock 

representatives assisted their customers in establishing a SDIRA and transferring 

existing retirement funds into the newly-established SDIRA. Second, Red Rock 

purchased precious metals for its customers using those SDIRA funds. Third, Red 

Rock facilitated the transfer of the newly-purchased metals to a depository or, in 

some cases, directly to the customer.

C. Red Rock’s Sales Pitch 

32. Red Rock’s website explained Red Rock’s mission as follows: “Most 

people are worried about losing money in their retirement accounts. At Red Rock 

Secured we convert that money into physical gold & silver so they can enjoy a worryfree retirement.” Promotional materials Red Rock provided to prospective 

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customers–often styled as “Guides” or “Playbooks”–touted precious metals IRAs as a 

means to “protect your retirement” or “preserve or potentially even grow your 

retirement wealth.” 

33. Kelly directed Red Rock sales personnel to emphasize these points in 

speaking with customers: 

At Red Rock Secured we know you want to be worry free. In order to do that, you need to protect your retirement savings. 

The problem is you can wake up and half your retirement could be gone which makes you feel powerless. 

We believe that you deserve to be confident that everything you have worked for will still be there tomorrow. We understand, 

in the last recession we saw too many Americans lose too much which is why we for over a decade have worked with our 

clients to protect their retirement savings by investing in gold 

and silver. 

34. “Trust” was also a common theme that Defendants promoted on Red 

Rock’s website, in its promotional materials, and in its training materials for sales 

staff. Such statements included: 

“Trust Comes First.” 

“We are committed to building relationships. All our client relationships are built on trust.” 

“Red Rock is dedicated to protecting your retirement – a 

company built on trust, expertise, and performance.” 

“All our client relationships are built on trust - this is an integral part of how we do business and informs all of our actions. We 

trust one another as we build trust with our clients.” 

35. In reality, Red Rock’s sales practices did not, in fact, “protect” 

customers’ retirement savings. Instead, by virtue of the various repeated 

misrepresentations alleged below, Red Rock betrayed the “trust” it repeatedly touted 

as integral to its business and informing all of Red Rock’s actions.

36. As part of its sales pitch, Red Rock also emphasized to prospective 

customers that certain categories of precious metals products are on the “CUSIP list” 

(Committee on Uniform Security Procedures) and thus are “trackable” by the 

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government, while other “non-CUSIP” products, including the RTH coins, are 

“private and non-trackable.” Red Rock told prospective customers that the CUSIP 

list allows “financial institutions and government entities to track and identify 

financial products.”

37. Red Rock also told prospective customers that “[b]y tagging, tracking, 

and identifying precious metals assets, CUSIP enables financial institutions and the 

government to monitor precious metals holdings and, of course, the investors who 

hold them” (emphasis in original). As such, according to Red Rock, “CUSIP metals 

are often referred to as ‘public’ gold or silver.” 

38. According to Red Rock, “Non-CUSIP metals act in nearly the opposite 

fashion—providing the highest levels of security and authenticity while maintaining 

anonymity.” As such, “Non-CUSIP metals are often called ‘private’ and/or 

‘premium’ metals.” 

D. Red Rock’s Products 

39. Red Rock generally categorized its precious metals products as either 

“common bullion” products or “premium” products. The “common bullion” category 

included comparatively less-expensive, lower-commission products such as metal 

bars and rounds. In contrast, the “premium” category included comparatively moreexpensive, higher-commission products such as the RTH coins. 

40. Promotional material Red Rock provided to prospective customers 

further categorized its precious metal offerings or “assets” as “common bullion,” 

“monetized bullion,” or “monetized bullion (limited quantity).” 

41. Red Rock’s promotional material steered customers toward its 

monetized bullion (limited quantity) products. 

1. “Common Bullion” 

42. According to Red Rock’s promotional material, “[b]ars and rounds are 

the most common form of bullion. Common in that investors who are new to 

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precious metals investing tend to gravitate to bars and rounds based on inexperience 

and lack of knowledge concerning other available options.”

43. Red Rock told prospective customers that bars and rounds offer “no 

monetary value other than the value of the metal based on weight.” According to Red 

Rock, “[t]his can affect the long-term profit and growth of the asset and its eventual 

resaleability since it does not provide the functionality of a currency piece as 

Monetized Bullion does.” 

44. Red Rock emphasized to prospective customers that common bullion 

assets are on the CUSIP list and thus trackable by the government. 

2. “Monetized Bullion” 

45. According to Red Rock’s promotional material, “monetized bullion” 

refers to coins produced from gold, silver, or other precious metals “that have been or 

are used as a medium of exchange.”

46. Red Rock told prospective customers that monetized bullion provides 

monetary value beyond the weight of the metal itself: “Because Monetized Bullion 

provides monetary value and functionality as a currency piece, whereas common 

bullion assets like bars and rounds do not, long-term growth and profitability can 

prove much greater as investors seek to acquire assets that enable them to cover all 

their bases—as an investment as well as a potential crisis instrument should they need 

to use their metal as an alternative to the dollar.” 

47. Red Rock emphasized to prospective customers that monetized bullion 

assets, like common bullion assets, are on the CUSIP list and thus trackable by the 

government. 

3. “Monetized Bullion (Limited Quantity)” 

48. According to Red Rock’s promotional material, “monetized bullion 

(limited quantity)” assets are similar to monetized bullion assets in that they are 

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produced by government mints, they may be used as media of exchange, and they 

function “as an investment and a potential crisis instrument.” 

49. Red Rock advised prospective customers that “[w]hile there are many 

similarities between” standard monetized bullion and monetized bullion (limited 

quantity), a “key differentiator that contributes to how the assets appreciate in value 

in the long term is mintage population.” Standard monetized bullion assets “are 

produced in significantly higher quantities,” as compared to monetized bullion 

(limited quantity) assets. 

50. According to Red Rock: “Whereas Standard Monetized Bullion can 

increase in price based on just two factors—intrinsic value and monetary value—the 

additional variable of limited supply size can cause Monetized Bullion (Limited 

Quantity) to move in value faster.” 

51. Red Rock emphasized to its customers that, in contrast to common 

bullion and standard monetized bullion assets, monetized bullion (limited quantity) 

assets are not on the CUSIP list and thus not trackable by the government. 

52. Red Rock told customers that monetized bullion (limited quantity) was 

preferable to common bullion and standard monetized bullion: “More often than not, 

Monetized Bullion (Limited Quantity) is the preferred option when building a 

precious metals portfolio for long-term profit, growth, and security.” And, “[t]hese 

assets are for savvy investors who want to protect their portfolios with precious 

metals through maximizing the value of their investment.” 

53. Red Rock classified and promoted the RTH coins as monetized bullion 

(limited quantity). 

E. Red Rock’s Pricing 

54. Red Rock advised its customers that common bullion products “are 

priced for the most part in accordance with the value of the precious metal they 

contain.” In contrast, premium products, including the RTH coins, “are priced at a 

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premium above the value of the precious metals they contain.” According to Red 

Rock, “[t]his premium is based on various factors, including, but not limited to, 

speculative interest, collector and investor demand, available supply, industry 

promotions, perceived value and economic conditions.” 

55. In its promotional literature, Red Rock further explained how its 

products were priced: “[A]ll orders are based off of current market prices, also 

referred to as spot price. Spot price is a common industry wide standard used to 

determine the value of one ounce of gold or silver. Different assets have different 

premiums above spot price.”

56. In the precious metals industry, the spot price refers to the price per 

ounce of metal available for immediate delivery on any one of a number of exchanges 

around the world where precious metals, including silver and gold, are traded each 

day.

57. “Melt value” (or “melt”) refers to the price of a given quantity of metal 

based on the “spot” (or per ounce) price. For example, if the spot price of silver is 

$16.00 per ounce, the melt value of a half-ounce silver coin would be $8.00.

58. The prices Red Rock paid Wholesaler 1 to acquire the RTH coins were 

directly tied to the spot prices of gold and silver. Internally, Red Rock referred to the 

prices it paid to Wholesaler 1 as its “cost of goods sold.”

59. In contrast, the prices Red Rock charged its customers for the RTH coins 

were not based directly on the spot price. Rather, Red Rock based the prices it 

charged customers on Red Rock’s “cost of goods sold.”

60. Red Rock’s mark-up on metals sold to customers was the difference 

between “its cost of goods sold” and the price Red Rock charged its customers for 

those same metals.

61. Kelly determined what mark-ups Red Rock charged for the assets it sold 

to customers. For “common bullion” products, Red Rock charged its customers 

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mark-ups of between approximately 3% to 5% above its cost of goods sold. For 

“premium” products, including the RTH coins, Red Rock charged its customers 

mark-ups of up to approximately 130% above its cost of goods sold. 

F. Red Rock’s Exclusive Premium Coin: The Canadian RedTailed Hawk 

62. In late 2019, Wholesaler 1 offered Red Rock an opportunity. 

Wholesaler 1 agreed to sell two coins—the half-ounce silver RTH coin and the onetenth ounce gold RTH coin—to Red Rock exclusively. 

63. Both the initial silver and gold RTH coins—and later a quarter-ounce 

gold RTH coin—were produced by the RCM and sold to one of its U.S. distributors. 

That distributor, in turn, sold the RTH coins to Wholesaler 1 exclusively. Wholesaler 

1 then sold them to Red Rock exclusively. 

64. Wholesaler 1 advised Red Rock that there was no mintage limit on the 

RTH coins. Effectively, the RCM would produce as many RTH coins as Red Rock 

could sell. 

65. Despite the absence of a mintage limit, Red Rock misleadingly classified 

and promoted the silver and gold RTH coins as “monetized bullion (limited 

quantity).” 

66. Wholesaler 1 sold Red Rock half-ounce silver RTH coins for 

“$2.95/coin over melt.” As Wholesaler 1 explained to Kelly: “If the silver spot 

[price] is $18.00/oz, your cost is $9.00 + $2.95 = $11.95” per coin. 

67. Wholesaler 1 sold Red Rock one-tenth-ounce gold RTH coins for “15% 

over melt.” As Wholesaler 1 explained to Kelly: “If the gold spot [price] is $1500/oz, 

your cost is $150.00 x 1.15 = $172.50 per coin.” 

68. As noted above, Red Rock routinely and repeatedly charged mark-ups of 

between approximately 100% to 130% on the RTH coins. 

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69. During the Relevant Period, Defendants incentivized Red Rock sales 

staff to sell its “premium” products, particularly the RTH coins. While sales of 

common bullion products typically entitled Red Rock’s sales staff to a commission of 

1% of the total purchase, the RTH coin sales carried an 8% commission. 

70. Beginning in January 2020, Spencer, who was consistently Red Rock’s 

top salesperson, received 10% sales commissions on his sales of the RTH coins. 

71. Consistent with Red Rock steering customers toward “monetized bullion 

(limited quantity),” the RTH coins were Red Rock’s bestselling products. The silver 

RTH coin was by far Red Rock’s single best seller during the Relevant Period, 

accounting for approximately 72% of Red Rock’s total sales, while the second-bestselling gold RTH coins accounted for approximately 7% of total sales. Together the 

silver and gold RTH coins accounted for approximately 79% of Red Rock’s total 

sales during the Relevant Period. 

72. During the Relevant Period, Red Rock sold more than 1.8 million RTH 

coins (1,799,404 silver RTH coins and 10,470 gold RTH coins). 

73. In total, approximately 959 customers paid Red Rock approximately 

$61.8 million to purchase RTH coins. 

G. Defendants Misrepresented and Omitted Material Information 

About Red Rock’s Mark-Ups 

1. Red Rock’s Transaction Agreement Misrepresented Its 

Mark-Ups 

74. Red Rock required its customers to sign a Transaction Agreement in 

order to purchase precious metals from Red Rock. 

75. Red Rock sales staff, including Spencer, routinely told customers to 

refer to their Transaction Agreement to answer any questions the customers might 

have. 

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76. During the Relevant Period, none of the Transaction Agreements signed 

by Red Rock’s customers disclosed Red Rock’s actual mark-ups on the products it 

sold. 

77. In fact, for almost the entire Relevant Period, the Transaction 

Agreements did not even include the term “mark-up.” 

78. Rather, prior to December 2021, the only apparent reference to Red 

Rock’s mark-ups in Red Rock’s Transaction Agreements consisted of the following 

language under the heading “Bid/Ask Spread”: 

The difference between the Purchase Price Client pays for Products under a Purchase Order and the price that Red Rock actually pays for the Products purchased by Client under such 

Purchase Order is known as the “spread” and it is stated as a 

percentage of the Purchase Price paid by the Client. 

79. One version of this “Bid/Ask Spread” provision informed customers that 

the “spread” on Red Rock’s “premium ... coins typically ranges, between 4% and 

29%.” A second version noted a typical range of “5% for CUSIP assets and 29% for 

Premium/non-CUSIP assets.” As noted above, Red Rock characterized the RTH 

coins as both “premium” and “non-CUSIP.” 

80. In December 2021, Red Rock revised its Transaction Agreement to 

include an explicit reference to “mark-up.” The “Bid/Ask Spread and Mark-Up” 

section in this revised Transaction Agreement included language strikingly similar to 

the opening sentence of the earlier “Bid/Ask Spread” language quoted above: 

“Mark-up” is the difference between the Purchase Price Clients 

pay for Products and the price that Red Rock pays for such 

Products. The mark-up can range anywhere from 5% to 120% depending on the type of coin and the fair market value at the 

time. 

81. None of the Transaction Agreements in use during the Relevant Period 

specified the actual mark-ups Red Rock charged on any particular product sold by 

Red Rock, including the approximately 100% to 130% mark-ups on the RTH coins. 

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2. Spencer and Other Red Rock Sales Staff Misled 

Customers about the Mark-Ups 

82. Accounting for approximately 79% of Red Rock’s total sales during the 

Relevant Period, sales of the RTH coins, which carried Red Rock’s highest mark-ups, 

vastly outstripped Red Rock’s “common bullion” product sales, which carried Red 

Rock’s lowest mark-ups. 

83. Despite this fact, Red Rock sales staff, including Spencer, misleadingly 

told some customers that Red Rock charged 1% to 5% “above our costs on common 

bullion assets,” even though the vast majority of customers purchased RTH coins, not 

common bullion assets. 

84. In fact, Red Rock sales staff were instructed to reference the 1% to 5% 

mark-up associated with Red Rock’s common bullion products when customers or 

prospective customers questioned Red Rock’s charges or fees. 

85. For example, responding to questions raised by Customer A in August 

2020, Senior Account Executive X wrote: “Red Rock makes money from the 

purchase of the precious metals. We charge 1-5% above our cost on all our common 

bullion assets. The price includes free shipping and free insurance.”

86. A few weeks later, Spencer used the same language when confirming 

Customer A’s purchase: 

Customer A: Okay. Yeah, I remember asking [Senior Account Executive X], you know, how you guys make your 

money and I guess you do it by your discounts you get from the mints. Is that – 

Spencer: We charge anywhere from – yeah, from the mints, exactly. Because we’re not a retail shop. We’re an investment firm. 

Customer A: Mm-hmm. 

Spencer: So, we have a direct relationship with the mints. We buy our metal in volume and we buy our metal in wholesale and we pass the savings on to you. We charge anywhere from 1 to 5 percent above our cost on common bullion assets. 

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87. Spencer referred to Red Rock’s “common bullion” mark-up of 1% to 5% 

despite knowing, as he confirmed later in the same conversation, that Customer A 

purchased only “premium” products, specifically silver and gold RTH coins, which 

carried mark-ups of approximately 129% and 115%, respectively. 

88. Customer A paid Red Rock $149,705.00 for 3,245 silver and 60 gold 

RTH coins. Red Rock charged mark-ups of approximately 129% on the silver RTH 

coins and approximately 115% on the gold RTH coins Customer A purchased. 

89. Spencer did not disclose to Customer A the actual mark-ups Red Rock 

charged Customer A on his silver and gold RTH coins. 

90. As a result of its misrepresented, undisclosed mark-up, Red Rock kept 

$83,595.50 of the $149,705.00 Customer A paid, while paying Wholesaler 1 only 

$66,109.50 for the RTH coins sold to Customer A. 

91. In February 2021, Senior Account Executive X referred to Red Rock’s 

“common bullion” mark-up in response to a question from Customer B: 

Customer B: Ok. What’s your mark-up on, when you buy the gold? 

Senior Account Executive X: Markup on gold, we charge between one to five percent above our cost on all our 

common bullion coins and bars, that's really 

aggressive, and it's free shipping and free insurance as well to the depositories. 

Customer B: One to five. How do you get the one? 

Senior Account Executive X: I mean, it all depends on the assets themselves and the mints. 

Because obviously, supply and demand, if the mint’s running 

out of something, they put out their price, so 

that's why we say one to five percent. You can go 

with five percent being the worst on the common bullion 

assets.

92. During the same conversation, Senior Account Executive X quoted 

prices for two one-ounce silver coins (the Canadian Maple Leaf and American Eagle) 

and silver rounds. 

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93. Red Rock classified the one-ounce silver Canadian Maple Leaf, the oneounce silver American Eagle, and one-ounce silver rounds as “bullion.” Red Rock 

charged a mark-up of 5% on the silver Canadian Maple Leaf, a 4% mark-up on the 

silver American Eagle, and a 4% mark-up on silver rounds. 

94. Customer B did not, however, purchase any of the “bullion” products 

referenced by Senior Account Executive X, and Red Rock did not charge a mark-up 

of 4% or 5%. Instead, Customer B paid Red Rock $74,680.00 for 2,015 silver RTH 

coins. Despite Senior Executive X quoting a mark-up of 1% to 5%, Red Rock 

charged a mark-up of approximately 129% for the RTH coins Customer B 

purchased. 

95. Customer B’s spouse, Customer C, likewise paid Red Rock $74,680.00 

for 2,015 half-ounce silver RTH coins. Red Rock charged a mark-up of 

approximately 129% on the RTH coins Customer C purchased. 

96. When Spencer called Customers B and C to confirm their purchases, he 

compared the half-ounce silver RTH coin which Customers B and C were purchasing 

to the one-ounce silver Canadian Maple Leaf: 

Customer B: Just to be clear ... what coins are you buying? 

Spencer: These are the half-ounce silver Canadian Red Tail 

Hawk, non-CUSIP list assets ...

Spencer: So, if you’re familiar with the Canadian Maple Leaf, for example – 

Customer B: Yes, I showed that out of your book to her. 

Spencer: Ok, good. Yeah, because these assets are exactly the same as those, except the one-ounce – you know, and as we discussed, anything one ounce or larger is on the CUSIP list. 

So, if you prefer to stay with assets that are not on the CUSIP 

list you’re not taxed twice for the same investment. (Emphasis added.) 

Customer B: Right, that’s what we prefer. 

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97. Spencer did not disclose the approximately 129% mark-up Red Rock 

charged Customers B and C. Nor did Spencer explain why two assets that he 

described as “exactly the same” (save for their CUSIP status) carried such different 

mark-ups, i.e., 5% for the silver Canadian Maple Leaf versus 129% for the half-ounce 

silver RTH coin. 

98. As a result of its misrepresented, undisclosed mark-ups, Red Rock kept 

$84,235.20 of the $149,360.00 Customers B and C paid, while paying Wholesaler 1 

only $65,124.80 for the RTH coins sold to Customers B and C. 

99. In May 2021, Spencer again invoked Red Rock’s “common bullion” 

mark-up of 1% to 5% when communicating with Customer D, this time omitting the 

“on common bullion assets” qualifier: 

As I indicated yesterday, your fee, which is a one-time fee, is 

1.83%. If you’re moving 110k for example, your fee is $1,830. Red Rock charges 1-5% above its cost from the mint. That 

range is adjusted accordingly based on the investment amount. 

100. Customer D paid Red Rock $149,624.20 for 3,990 silver RTH coins 

(excluding 10 silver RTH coins provided at no charge). Contrary to Spencer’s earlier 

assertion, Red Rock charged a mark-up of approximately 129%, not a “fee” of 

1.83%. 

101. When Spencer called Customer D to confirm his purchase, Defendant 

Spencer did not disclose the 129% mark-up Red Rock charged Customer D. 

102. As a result of its misrepresented, undisclosed mark-up, Red Rock kept 

$84,224.20 of the $149,624.20 Customer D paid, while paying Wholesaler 1 only 

$65,400.00 for the RTH coins sold to Customer D.

103. In February 2021, Customer E asked Senior Account Executive Y: 

“How does your ... fee thing work? I noticed in that book it says there is no fees 

[sic], but you guys [have] got to make money somewhere, somehow.” Senior 

Account Executive Y responded: 

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You are absolutely right, we are not a non-profit. We are definitely a for-profit company. The way that we make money is that we have a mark-up on the coins. So, we essentially just make money one time, and one time only. So, what will happen is that just like any business, we're buying at wholesale. So, for example, let's just use a Silver American Eagle, for example. We're buying it at, let's say, $25.00; we're selling it at $26.50. So, that $1.50 markup on that coin is where we make 

our money. 

104. As noted above, Red Rock classified the Silver American Eagle coin as 

“bullion,” carrying a 4% mark-up. Red Rock sold only 1,307 Silver American Eagle 

coins in 2020, and 249 in January 2021. As a point of comparison, Red Rock sold 

more than 69,000 silver RTH coins in January 2021 alone. 

105. Following her conversation with Senior Account Executive Y, Customer 

E paid Red Rock $19,679.85 for 505 half-ounce silver RTH coins. Put differently, 

Customer E paid Red Rock $38.97 per coin, while Red Rock purchased those same 

coins from Wholesaler 1 for $16.98 per coin. 

106. In contrast to the $1.50 mark-up example cited by Senior Account 

Executive Y, Red Rock charged a mark-up of $21.99 per coin, or approximately 

129%, on the RTH coins Customer E purchased. 

107. When Spencer called to confirm Customer E’s purchase, he did not 

disclose the 129% mark-up that Red Rock charged. 

108. As a result of its misrepresented, undisclosed mark-up, Red Rock kept 

$11,104.95 of the $19,679.85 Customer E paid, while paying Wholesaler 1 only 

$8,574.90 for the RTH coins sold to Customer E. 

109. In total, as a result of Red Rock’s misrepresented, undisclosed mark-ups, 

Red Rock kept approximately $34.4 million of the approximately $61.8 million paid 

by customers for RTH coins, while paying Wholesaler 1 only approximately $27.4 

million for RTH coins. 

110. Defendants knew, or were reckless in not knowing, that their 

communications with customers about Red Rock’s mark-ups on RTH coins—

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including the examples above—contained material misrepresentations, half-truths, 

and omissions. 

H. Defendants Misrepresented Red Rock’s Relationship with the 

Mints, the RCM’s Role in Pricing the RTH Silver Coin, and 

“Limited Mintage” of the Silver RTH Coin 

1. Misrepresentations About Red Rock’s Relationship with 

the Mints 

111. Spencer and other Red Rock representatives routinely told customers 

and prospective customers that Red Rock had a “direct relationship” with “the 

mints,” when, in fact, no such relationships existed. 

112. In addition, Spencer repeatedly told customers and prospective 

customers that Red Rock was not a “retail company,” when, in fact, it was a retail 

company. 

113. For example, in a July 2021 follow-up email to Customer F, Spencer 

touted the purported benefits of Red Rock’s “direct relationship” with the mints: 

As we discussed previously, Red Rock Secured is not a retail 

company/coin shop. I would venture to guess that the other 

companies you’ve contacted fall more on the retail side of the 

spectrum. Retail companies do not have a direct relationship with the mints, the metal they provide to you must be secured through a metals distributor, and as a result you end up paying much higher premiums for the same metal you could acquire 

from Red Rock Secured for substantially less. 

The benefit to you in working with Red Rock Secured is we are 

an investment firm, we have a direct relationship with the mints, and therefore we are able to acquire the metal we provide to you at wholesale prices. 

 

Our fee structure, as we discussed previously, is between 1% and 5% on common bullion assets. Comparatively, retail companies will charge upwards of 25% to 30%. 

 

When acquiring metal through a retail company, investors pay the retail company’s markup, the metals distributor’s markup, and the mint’s markup. You end up with substantially less metal in your portfolio as a result. 

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114. Spencer’s email to Customer F above is riddled with false and 

misleading statements: Red Rock never had a direct relationship with any mint; Red 

Rock was in fact a “retail company;” Red Rock had to secure its metals through a 

“metals distributor” just like other retail precious metals dealers; and all of the 

various “markups” referenced by Spencer were in fact paid by Red Rock’s customers. 

115. Spencer also invoked Red Rock’s purported “direct relationship” with 

“the mints” when confirming Customer A’s purchase of silver and gold RTH coins: 

“So, we have a direct relationship with the mints. We buy our metal in volume and 

we buy our metal in wholesale and we pass the savings on to you.” 

116. Spencer also told at least one customer, Customer G, that Red Rock had 

“an exclusive relationship” with the RCM. 

117. Later that month, Customer G contacted Spencer to inquire about the 

price/value of his silver RTH coins: 

Customer G: I am not understanding how 111 1/2 oz Canadian red tailed hawks are worth $4,000 dollars. At about $27 an 

ounce that would come to 55.5 ounces x 27=$1498.5. Can you explain? Because I can buy the same thing from [a Red Rock competitor] for 26.7 and [sic] ounce. Please let me know what 

happened here? 

118. In responding to Customer G, Spencer invoked Red Rock’s purported 

“exclusive relationship” with the RCM, among other purported benefits of the RTH 

coins: 

Spencer: As we discussed, your assets are not on the CUSIP 

list and therefore are completely private with no tracking or 

serial number attached to them. They are also monetized, which means you can use them as legal tender if necessary. You can liquidate these assets privately, which is one of the main reason 

[sic] they are continuing to appreciate in value very quickly. The version that [the Red Rock competitor] provides is a one ounce coin produced in 2015. Anything 1 oz or larger is on the 

CUSIP list and is not a private asset. [The Red Rock competitor] does not have access to the 1/2 oz Canadian Red 

Tailed Hawk, as they are a retail company, whereas Red Rock 

Secured has an exclusive relationship with the Royal Canadian 

Mint. As a result, your assets are worth considerably more when you liquidate/sell them. Please let me know if you have any additional questions. (Emphasis added). 

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119. Contrary to Spencer’s assertions, Red Rock did not have “a direct 

relationship with the mints” or an “exclusive relationship” with the RCM. Rather, 

Red Rock bought all of the metal it sold to customers from Wholesaler 1. 

120. As another example, Senior Account Executive Y, responding to 

questions from a prospective customer, also referred to Red Rock’s “direct” 

relationship with the mints: 

We see that directly because we’re a direct wholesaler to the 

US Mint, the Canadian Mint, Perth, and Swiss Mints. The way that we save our clients money is that there is no middleman. 

We buy directly from them and then pass the savings to you, so there’s no additional markup ... for someone in between that 

we have to buy it from. 

121. This statement was false. Red Rock does not “buy directly from the 

mints.” Rather, Red Rock buys all of its metal from a “middleman”—Wholesaler 

1—and pays that “middleman” an “additional markup.” 

2. Misrepresentations About the RCM’s Role in Pricing the 

Silver RTH Coin 

122. Spencer told at least one prospective customer that “the value of” the 

silver RTH coin was “set by the [Royal Canadian] mint, which has listed the coin for 

49.99 CAD. Therefore, re-salability, and ROI [Return On Investment] are 

exceptionally, comparatively much stronger than the common one oz. assets for the 

reasons we discussed.” 

123. In fact, the RCM did not set the value of the RTH coins and did not list 

prices for them. Rather, Kelly set the “value” (i.e., the price) at which Red Rock sold 

the RTH coins. 

3. Misrepresentations about Limited Mintage of the Silver 

RTH Coin 

124. Spencer misrepresented the mintage population of the silver RTH coin to 

at least one customer. 

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125. On June 24, 2020, Customer H paid Red Rock $20,122.69 for 745 silver 

RTH coins. Customer H paid Red Rock $27.09 per coin for the first 720 coins and 

somewhat lower prices for the remaining 25 coins. 

126. During a telephone conversation confirming Customer H’s purchase, 

Spencer described the half-ounce silver RTH coins as “monetized bullion, limited 

quantity.” 

127. The next day, Customer H contacted Spencer after she discovered oneounce silver RTH coins selling for $16.46 each and various other half-ounce silver 

coins selling for $19.99 or $22.69 each, prices substantially lower than what 

Customer H paid Red Rock for almost all of the half-ounce silver RTH coins she 

purchased. 

128. Responding to Customer H, Spencer falsely suggested that there was a 

mintage limit for Red Rock’s silver RTH coin which enhanced its value: “Your coins 

were $27.09 when you bought them. They are now trading at $27.35 per coin. In 

addition to not being on the CUSIP list, the other main reason these coins are priced 

the way they are is they are part of a limited mintage population—30k coins will be 

produced for 2020.” (Emphasis added). 

129. In fact, just over two weeks earlier, Customers I and J purchased a total 

of 32,705 silver RTH coins from Red Rock. Spencer confirmed both sales in a single 

confirmation call on June 9, 2020. 

130. Moreover, on the same day Spencer told Customer H that only 30,000 

silver RTH coins would be produced for 2020, Wholesaler 1 advised Red Rock that: 

(i) there was no mintage limit on the RTH coins; and (ii) 446,360 silver RTH coins 

had been minted between November 2019 and June 26, 2020. 

131. Contrary to Spencer’s representation to Customer H, 632,163 silver RTH 

coins were minted in 2020. 

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132. Spencer and other Red Rock representatives knew, or were reckless in 

not knowing, that their communications with customers concerning Red Rock’s 

relationship with the mints, the RCM’s role in pricing the RTH coins, and limited 

mintage of the RTH coins, including those described above, contained material 

misrepresentations, half-truths, and omissions. 

I. Spencer Misrepresented Red Rock’s Purported Discounts and 

Bonuses Offered to Customers 

133. Spencer routinely misrepresented to customers that the metals they 

bought from Red Rock were “discounted.” 

134. Typically, Red Rock charged customers full price for assets the 

customers purchased. This price was known internally at Red Rock as the “retail 

ask” price. Red Rock account executives, including Spencer, had continuous, realtime access at their desks to Red Rock’s retail ask prices, as well as the spot prices of 

silver and gold. 

135. Red Rock account executives could, in their discretion, offer discounts 

from the retail ask price, with any such discounts coming out of their sales 

commission. In addition, Red Rock offered a limited number of discounts when 

customer purchases reached certain thresholds. 

136. In confirming customers’ purchases, Spencer routinely referred to the 

prices paid as “discounted” even when customers, including, for example, Customers 

D, H, and K, were charged the full retail ask price. 

137. On May 4, 2021, Spencer told Customer D: 

As I indicated yesterday, your fee, which is a one time fee, is 1.83%. If you’re moving 110k for example, your fee is 1,830 dollars. Red Rock charges 1-5% above its cost from the mint. 

That range is adjusted accordingly based on the investment amount. There are no fees when you sell the metal back to Red Rock. You also receive the 15% bonus at 125k, 12-month Price Protection Plan, and No Fees for Life of the account with [the SDIRA custodian]. 

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138. As noted above, Customer D purchased 3,990 silver RTH coins from 

Red Rock, packaged in sixteen 240-coin boxes, seven 20-coin tubes, and one 10-coin 

tube. Red Rock also provided Customer D with one 10-coin tube free of charge. 

139. Red Rock’s full retail ask price for the silver RTH coins sold to 

Customer D was $37.58 per coin. 

140. Confirming the purchase, Spencer told Customer D that the sixteen 

boxes, seven 20-coin tubes, and one 10-coin tube he purchased were provided at a 

“discounted price.” 

141. In fact, Red Rock charged its full retail ask price of $37.58 on all 3,990 

of the silver RTH coins Customer D purchased. None of those coins were sold to 

Customer D at a “discounted price.” 

142. In addition, contrary to Spencer’s representation, Customer D did not 

receive a “15% bonus.” In fact, the retail ask price for the ten coins Customer D 

received free of charge ($375.80) represents a “bonus” of less than one-half of one 

percent of the total Customer D paid Red Rock ($149,624.20). 

143. Customer H paid Red Rock $20,122.69 for 745 silver RTH coins, 

packaged in three 240-coin boxes, one 20-coin tube, and one 5-coin tube. 

144. Red Rock’s full retail ask price for the 745 silver RTH coins sold to 

Customer H was $27.09 per coin. 

145. Confirming the purchase, Spencer told Customer H: “Each box is 

provided at a discounted price of $6,502.56, subtotal $19,507.68.” 

146. In fact, Red Rock charged Customer H its full retail ask price ($27.09 

per coin) on every coin in each of the three 240-coin boxes. Contrary to Spencer’s 

representation, no discount was provided on the boxes of coins sold to Customer H. 

147. Customer K paid Red Rock $99,680.00 for 2,520 silver RTH coins, 

packaged in ten 240-coin boxes, five 20-coin tubes, one 10-coin tube, and two 5-coin 

tubes. 

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148. Red Rock’s full retail ask price for the silver RTH coins sold to 

Customer K was $39.58 per coin. 

149. When confirming the purchase, Spencer told Customer K that each box 

and tube of coins that he purchased was provided at a “discounted price.” In fact, 

Red Rock charged Customer K its full retail ask price of $39.58 per coin on 99.8% 

(2,515 of 2,520) of the silver RTH coins he purchased. Contrary to Spencer’s 

representation, only the last five coins were sold at a “discounted” price of $27.26 per 

coin. 

150. Spencer also told Customer K: “As I mentioned to you before the fee 

was 1.83%, the discount was 5%, so you’re clearing an additional 3100, so the 

amount of metal that you’re controlling in the account right now is” $103,117. 

151. In fact, contrary to Spencer’s representation, Red Rock did not charge 

Customer K a 1.83% fee. Rather, Red Rock charged a mark-up of approximately 

130%. Nor did Red Rock apply a 5% discount to Customer K’s purchase. Instead, 

the discount offered on only five of the 2,520 coins Customer K purchased totaled 

only $61.60. As a percentage of Customer K’s $99,680.00 purchase, $61.60 

represented a discount of less than 0.1%. 

152. Spencer knew, or was reckless in not knowing, that his communications 

with customers regarding purported discounts and bonuses, including the examples 

discussed above, contained material misrepresentations, half-truths, and omissions. 

J. Defendants Misrepresented the “Retail/Market Value” of 

Customers’ RTH Coins 

153. As part of the scheme to defraud, Defendants misrepresented the “retail 

value” of the RTH coins purchased by customers. 

154. Customers who used retirement assets to purchase the RTH coins 

received account statements from their SDIRA custodians showing account values 

significantly below the prices customers originally paid to Red Rock. The SDIRA 

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account statements reflected significantly lower values for the RTH coins because the 

SDIRA custodians assessed the value of the accounts based on the melt value of the 

coins. 

155. Defendants rejected the lower valuations assessed by the SDIRA 

custodians and instead provided to customers what Defendants considered to be the 

actual “retail value” of the RTH coins at any given point in time. 

156. For example, beginning in at least February 2021, Red Rock’ s 

Transaction Agreement advised customers that: 

The “melt value,” which represents the value of metal in its raw 

and unrefined state prior to it being converted into a finished 

tangible asset, is not indicative of your asset’s true retail/market value. For example, “melt value” usually represents approximately 1⁄2 of your purchase value on Non-CUSIP assets. 

Conversely, the retail/market value of your assets is typically twice the melt value of Non-CUSIP assets due to the following factors that add additional value to your metals: market 

demand, investor demand, and supply and demand. 

157. When confirming customer purchases over the phone, Red Rock 

representatives, including Spencer, read from a script reiterating to customers that the 

“melt value” of the RTH coins represented only half of the RTH coins’ “true 

retail/market” value: 

[T]he retail value of your product is different than its melt 

value. For example, the “melt value” represents the value of metal in its raw and unrefined state prior to being converted into a finished tangible asset. Therefore, the melt value is approximately one half of your purchase value on non-CUSIP assets. The other half is based on non-CUSIP investment 

values such as the value of comparable assets found through the applicable mint: market demand, investor demand, and supply and demand. As such, the “melt value” is not indicative of your 

asset’s true retail/market value. 

158. Spencer routinely addressed the purported distinction between “melt” or 

“assessed” value on the one hand and “retail/market” value on the other hand with 

Red Rock customers. 

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159. In at least one instance, Spencer addressed the issue as part of regular 

updates he provided to customers purporting to show the current “retail value” of 

their precious metals. 

160. For example, on August 18, 2021, Customer L paid $99,740.00 to Red 

Rock. Two days later, Spencer sent Customer L a “data overview” stating that the 

“current retail value” of his silver RTH coins had risen to $100,014.58. 

161. According to Spencer, the $100,014.58 “current retail value” of 

Customer L’s silver RTH coins broke down as follows: 

INVESTOR DEMAND = 28% ($28,004.08) 

SUPPLY AND DEMAND = 26% ($26,003.79) 

MARKET DEMAND = 26% ($26,003.79) 

SPOT = 20% ($20,002.92) 

162. Contrary to the representations in Red Rock’s Transaction Agreement 

and confirmation script that melt value accounted for approximately one half of 

purchase value, Spencer told Customer L that the spot or melt value accounted for 

less than one quarter of the “current retail value” of Customer L’s RTH coins. 

163. Spencer also stated that the overview incorporates “all four factors”—

investor demand, market demand, supply and demand, and spot (i.e., melt value)—

“provided by the Royal Canadian Mint by percentage and corresponding dollar 

amount.” 

164. In this overview and at least four others provided to Customer L, 

Spencer referred to the purported current retail account information as “baseline data 

provided by the Royal Canadian Mint.” 

165. The following month, Customer L inquired about the disparity between 

the value of his RTH coins as reported by his SDIRA custodian ($32,000) and the 

amount of money he paid to Red Rock ($99,740,00): 

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Customer L: Mornin, looking at [my SDIRA custodian statement], the balance is only showing 32 k As a balance with 0 pending. Looking to see where the rest is? 

Spencer: [A]s we’ve discussed, that is the assessed value, not the retail value. [Your SDIRA custodian] and all other 

custodians can only report the assessed value because they do 

not buy or sell metal. What I have been sending you weekly is the retail value. 

Customer L: I did not buy 32 k assets worth of silver I purchased 100 k, worth of silver and feel very cheated at this time! Make it right! 

Spencer: [W]hat you’re seeing is the melt value, what the metal is before it’s been taken out of the ground. [Your SDIRA] and all custodians, under the 1997 Tax Payers Relief Act, can only report melt because custodians do not buy or sell metal. We’ve covered this several times before, which is why I have been sending you the weekly review so you have an accurate 

accounting of the value of the account. 

166. In similar messages to other Red Rock customers, Spencer provided 

retail account values purportedly attributable to the “four factors provided by the 

Royal Canadian Mint.” For example:

In an “account update” for Customer D: “Here is a breakdown 

of the data as provided by the Mint.” 

In a “weekly overview” for Customer M: “Your current retail 

value (baseline data provided by the Royal Canadian Mint) is 199,254.26.” 

In a “current retail value” update for Customer N, who 

purchased silver RTH coins: “The current retail value is 

27,214.29. The data that helps to inform the value of the 

investment—75% of which—is provided by the mint.”

167. In reality, both the “true retail/market value” touted by Red Rock and, to 

an even greater degree, the “current retail value” updates provided by Spencer 

substantially overstated the actual value of the RTH coins. 

168. In fact, on at least two occasions, Kelly and Spencer were made aware of 

silver RTH coins being resold at prices substantially below the prices charged by Red 

Rock. In September 2020, Kelly and Spencer learned that some silver RTH coins 

were offered for sale by a Canadian website unconnected to Red Rock. In October 

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2020, a prospective customer alerted Spencer that Red Rock was charging “more than 

double what they are selling for in Canada.” 

169. Reacting to RTH coins being offered for substantially lower prices in 

September 2020, Kelly told Wholesaler 1: “[T]his is freaking me out. What is this?” 

In October 2020, Kelly told Wholesaler 1 and Red Rock’s vice president of finance: 

“Guys, this is KILLING our deals.” (Emphasis in original.) 

170. Moreover, contrary to Spencer’s repeated representations, the RCM did 

not provide data concerning the purported “current retail value” of the RTH coins. 

171. Defendants knew, or were reckless in not knowing, that their 

communications with customers regarding purported “true retail/market value” and 

“current retail value,” including those described above, contained material 

misrepresentations, half-truths, and omissions. 

K. Kelly Acted as a Controlling Person of Red Rock 

172. During the Relevant Period, Kelly owned an 80% share of Red Rock and 

served as Red Rock’s CEO. The other two owners only provided capital to Red 

Rock. Neither of them worked for Red Rock or played any role in Red Rock’s dayto-day operations. 

173. Kelly was one of two signatories on Red Rock’s bank accounts. The 

other signatory was Red Rock’s Vice President of Finance who was hired by and 

reports to Kelly. 

174. Kelly had discretion to take distributions from Red Rock and Red Rock 

paid some of his personal expenses directly. 

175. Kelly was responsible for hiring Red Rock staff, including Red Rock’s 

director of sales, as well as Spencer and at least one other long-tenured senior account 

executive. Kelly also led Red Rock’s weekly sales meetings. 

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176. Kelly determined the mark-ups Red Rock charged for its “premium” 

coins, including the RTH coins, as well as the commissions Red Rock paid its sales 

staff. 

177. Kelly was responsible for determining what Red Rock sales staff told 

customers or prospective customers about mark-ups and fees. 

178. On at least some occasions, Kelly reviewed the recorded calls of Red 

Rock sales staff and provided written guidance about what sales staff could or should 

tell prospective customers. 

179. Kelly did not act in good faith or knowingly induced Red Rock’s 

fraudulent acts. 

L. Allegations Specific to Claims Brought by the State of 

California: Red Rock Acted from the State of California as an 

Unregistered Investment Adviser and Defendants Engaged in 

Fraud 

180. The laws of the state of California govern the registration of Investment 

Advisers (“IAs”). 

181. The laws of the State of California also prohibit (1) fraud in connection 

with investment advisory services, and (2) fraud in connection with the offer, 

purchase, or sale of commodities and commodity contracts. 

182. During the Relevant Period, Defendants engaged in an aggressive 

advertising campaign over various channels including phone solicitations, Red 

Rock’s website, direct marketing emails, and advertisements in third party emails and 

newsletters. Defendants used scare tactics to convince prospective customers to 

transfer funds, including funds from liquidating securities, in their tax-deferred 

retirement accounts, including IRAs, 401(k) plans, and the U.S. Government TSP 

(“Qualified Retirement Savings”) to purchase precious metals, including the RTH 

coins, to purportedly preserve and protect customers’ retirement funds. 

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1. Red Rock Acted in the State of California an 

Unregistered Investment Adviser 

183. During the Relevant Period, Red Rock, directly or by and through its 

sales representatives or other agents, including Kelly and Spencer, from California, 

engaged in the business of providing investment advice to customers and prospective 

customers nationwide for compensation from the liquidation of customers’ Qualified 

Retirement Savings, some of which held securities. As part of the scheme to defraud, 

Red Rock, directly or by and through its sales representatives or other agents, assisted 

at least 592 customers in transferring Qualified Retirement Savings into SDIRAs. 

184. For example, directly or by and through its sales representatives or other 

agents, Red Rock assisted customers with electronic SDIRA application and transfer 

forms. In some cases, Red Rock’s representatives or other agents facilitated phone 

calls between customers and the entity holding the customer’s Qualified Retirement 

Savings, which included securities, to arrange the liquidation of the customer’s 

Qualified Retirement Savings and the transfer of their Qualified Retirement Savings 

into a SDIRA. 

185. Spencer and Red Rock, directly or by and through Red Rock’s sales 

representatives or other agents, steered customers to purchase the RTH coins through 

their SDIRAs. Kelly selected the mark-ups on the RTH coins sold to customers. 

186. During the Relevant Period, Red Rock, directly or by and through its 

sales representatives or other agents, for compensation in the form of mark-ups on 

precious metals sales, commissions, and distributions, engaged in the business of 

providing investment advice directly and by or through publications, writings, or 

sales calls including: 

a. Spencer and Red Rock, directly or by and through Red Rock’s sales representatives or other agents, held Red Rock out as an IA to customers. 

For example, on sales calls and in written correspondence, Spencer told prospective customers that Red Rock was not a retail shop, it was an investment firm and the company's marketing guides state that it “has been in the investment and financial services industry since 2009”; 

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b. With Kelly’s approval, Red Rock paid third parties and Red Rock staff to prepare marketing materials. These marketing materials compared the securities market to the precious metals market. Kelly consented to the use of these materials and provided these materials to Red Rock’s staff who 

provided these materials to prospective and existing customers; 

c. Kelly, Spencer, and Red Rock, directly or by and through Red Rock’s sales representatives and other agents, touted the advantages of investing in 

precious metals as an alternative to stocks, bonds, and the U.S. Dollar. For 

example, in the late summer or early fall of 2020, Kelly and Spencer told California Customer 1 that he needed gold and silver in his IRA to protect against market drops or inflation; 

d. Red Rock, directly or by and through its marketing materials, sales representatives, or other agents, advised about market trends, specifically that the stock market would fall or lose value; 

e. Red Rock, directly or by and through its sales representatives or other agents, sent emails highlighting articles that would induce fear in the 

customers about their preexisting Qualified Retirement Savings; 

f. Red Rock posted charts on its website directly comparing the Dow Jones, S&P 500, and value of the U.S. dollar to the value of gold and silver. Kelly advised sales staff to refer prospective clients to these charts; 

g. Red Rock, directly or by and through its sales representatives or other agents, including Spencer, advised and directed customers to sell securities 

held in Qualified Retirement Savings and transfer the proceeds to SDIRAs in order to purchase RTH coins from Defendants; 

h. Spencer advised prospective clients to “be careful what you wish for because, if you want to see gold go to the moon and silver go to the moon - - granted it’s now part of your portfolio - - that means the rest of what you have [in the stock market] has to become worth nothing”; 

i. Red Rock, directly or by and through its sales representatives or other agents, provided asset allocation advice, recommending that clients transfer 10% to 30% of their retirement savings into precious metals to diversify; and 

j. By way of example, Kelly, Spencer, and Red Rock, directly or by and through Red Rock’s sales representatives or other agents, provided investment advice to the following customers and prospective customers: 

(i) In the late summer and early fall of 2020, Red Rock provided retirement-aged California Customer 1 with a copy of its TSP Playbook. Spencer told California Customer 1 that he had a Ph.D. in 

economics and encouraged California Customer 1 to liquidate as much as possible out of his TSP account to purchase precious metals. 

Spencer recommended the Canadian RTH coins. When California 

Customer 1 inquired about purchasing non-Canadian coins, Spencer stated that he knew best and was adamant that the RTH coins would 

save California Customer 1 the most on taxes. Kelly and Spencer further told California Customer 1 the importance of gold and silver in his IRA to protect against market drops or inflation. California 

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Customer 1 liquidated $150,000 worth of securities from his TSP 

account to purchase RTH coins; and 

(ii) In August of 2021, a Red Rock sales representative informed prospective California Customer 2 that “silver has a better upside than gold which could be double the profit potential . . . . If the stock market has a correction, and we are due for one, that could drive up the price of precious metals so that could drive up those expectations.” The Red Rock sales representative recommended that prospective California Customer 2 transfer 10% to 30% of his retirement savings into precious metals to diversify. 

187. During the Relevant Period, Red Rock advertised in a widely circulated 

newsletter for federal government employees. These advertisements were aimed at 

TSP participants. A TSP is a retirement savings and investment plan for federal 

government employees which offers participants the ability to invest in securities. 

188. The advertisement invited readers to claim a free copy of the #1 TSP 

Playbook and noted that inside the document prospective customers would discover: 

How precious metals can protect [their] retirement savings from inflation, economic uncertainty, stock market crashes and 

increasing foreign currency manipulation. Why gold and silver are positioned for big gains in the next 2-4 years. 

189. The advertisement went on to discuss the “Advantages of Rolling Over 

Your TSP to A Self Directed Gold IRA” including: 

The current TSP structure could doom you to failure, locking 

you in to poor investments in your portfolio. If the market 

crashes, your retirement savings could be at risk for major losses. In times of pandemic, tragedy and extreme market crashes, Gold has reached record highs. It is truly the counterbalance investment when things go bad. 

190. Prospective customers were warned that they need to “Act quickly. For 

those TSP holders that continue to follow the same path with their investment 

strategy, things could get a lot worse: there is no stimulus for a loss of your 

retirement savings. Even losing 50% of your retirement could have implications on 

you and your family for decades to come.” 

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191. During the Relevant Period, Red Rock, by and through its sales 

representatives and other agents, routinely provided prospective customers with a 

copy of the company’s #1 TSP Playbook containing investment advice, including: 

In the section titled Market Roller Coasters, Frank’s Big Drop: 

“Let’s not fool ourselves, another market down turn is coming. It’s inevitable, like the tide. Markets run in waves, and all waves grow, break and crash, right? So your TSPs total value 

is tied to whatever market you’re in. . . . As of July, 2019, we’re back where we were a dozen years ago. . . . That’s why when the tide comes, if you’ve moved out of your TSP into a self-directed IRA, you cannot only avoid the pain of market 

crashes, you can profit by them. Because there’s another 

market we haven’t talked about in this chapter yet...and that’s precious metals. Typically, when stocks, real estate, and other dollar-denominated assets are up, metals move in the opposite direction. And the reverse is also true.” 

In the section titled Where to Go from Here: “I’ve tried to 

explain both the reasons we believe that precious metal should 

be a part of your retirement. I’ve illustrated how moving a percentage of your TSP into a self-directed individual 

retirement account can be a good move in helping to secure your future. We’ve talked about market trends and how to read 

them in order to create, grow and preserve your wealth. . . . The one thing that’s absolutely certain, however, is that change is coming. As I write this, we’re in an unprecedented bull stock market. . . . it’s destined to end up crashing on the shore.” 

192. During the Relevant Period, Red Rock, by and through its sales 

representatives and other agents, routinely provided prospective customers with a 

copy of the company’s 2020 A Case for Silver Investment Guide containing 

investment advice, including “You Can Protect Your Retirement Savings from a 

Severe Market Correction.” After discussing the worst stock market crashes in U.S. 

history, the guide states: “Is there something you can do to protect yourself? Yes. 

You can invest your hard-earned money in gold and silver.” 

193. During the Relevant Period, Red Rock, by and through its sales 

representatives and other agents, routinely provided prospective customers with a 

copy of the company’s Gold and Silver Guide containing investment advice, 

including: 

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So how can you diversify into gold, silver, and other precious metals? You could use some of your savings to make a 

purchase right now. But a better way [is] to use money already 

in a 401(k) or IRA account to purchase gold and silver. . . . 

2. Defendants Engaged in Investment Adviser and 

Commodities Fraud 

194. Kelly, Spencer, and Red Rock, directly or by and through Red Rock’s 

sales representatives or other agents, engaged in a scheme to defraud and made 

material misrepresentations and material omissions in providing investment advice to 

customers to transfer their Qualified Retirement Savings, including selling their 

securities, to purchase commodities and commodity contracts in the form of RTH 

coins from Red Rock. 

a. Defendants’ Scheme to Defraud 

195. During the Relevant Period, Kelly, Spencer, and Red Rock, directly or 

by and through Red Rock’s sales representatives or other agents, willfully engaged in 

a scheme to defraud by: 

a. Advising prospective customers that precious metals can protect retirement savings from stock market crashes and severe market corrections, and that customers can profit by purchasing precious metals including the RTH coin; 

b. Steering approximately 79% of all customers into the RTH coin, and 

counseling sales representatives that were not recommending the RTH coin which carried a high mark-up. For example, Kelly and Spencer, on behalf of Red Rock, admonished senior sales representatives who sold bullion with low commissions to customers. Between October 2019 through September 2020, Kelly and Spencer consistently admonished and counseled Senior 

Account Executive Z, claiming that the company would go out of business if he continued to recommend selling bullion with low commissions to customers. Defendants Kelly and Spencer did not admonish or counsel 

Senior Account Executive Z when he recommended selling the RTH coins to customers; and 

c. Misrepresenting the mark-up on its premium coins in its Transaction Agreements, misleading customers about the mark-ups by routinely telling customers that Red Rock “charge[s] one to five percent above our costs on common bullion assets,” despite knowing that the company steered consumers into “premium” coins including the RTH coin, with mark-ups above 1% to 5% and failing to disclose the actual mark-ups on the RTH coins. 

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b. Defendants’ Material Misrepresentations and 

Omissions 

196. Red Rock, directly or by and through its sales representatives or other 

agents, including Kelly and Spencer, made material misrepresentations and material 

omissions regarding Qualified Retirement Savings, including securities, as compared 

to precious metals which included, but were not limited to, misleading statements to 

instill fear in retirement-aged customers about their Qualified Retirement Savings to 

justify the advice to liquidate securities and transfer these funds to Defendants for the 

purchase of precious metals, while misrepresenting and failing to disclose the markups charged on the RTH coins. 

197. Spencer and Red Rock, directly or by and through Red Rock’s sales 

representatives or other agents, made material misrepresentations and material 

omissions regarding the company and its sales representatives or other agents’ 

experience and expertise which included, but were not limited to, the following: 

a. Misrepresented to prospective customers that Spencer had a Ph.D. in economics when he did not; 

b. Misrepresented to prospective customers that Spencer had 25 years of experience in precious metals when he did not; 

c. Misrepresented that Red Rock’s leadership team, which included Kelly and Spencer, “have worked tirelessly” on the #1 TSP Playbook and that they have “spent nights countless [sic] hours pouring over pages of Thrift Savings Plan rules and regulations so as to make your options clear and easy to understand” when they did not. 

 d. Represented that Red Rock had 10 years in business, and failed to clarify that it began operating in the precious metals industry in 2016; 

e. Misrepresented that Red Rock was an investment firm as opposed to a “retail company,” when, in fact, it was a retail company; and 

f. Misrepresented to customers and prospective customers that Red Rock had a “direct relationship” with “the mints” and an “exclusive relationship” with the RCM, and as such save their clients’ money on mark-ups and lack of a middleman, when, in fact, no such relationships existed and Red Rock paid the “middleman”—Wholesaler 1—an additional markup. 

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198. Red Rock, directly or by and through its sales representatives or other 

agents, made material misrepresentations and material omissions regarding their 

compensation structure which included, but were not limited to, the following: 

a. Misrepresented how Red Rock’s sales representatives or other agents were compensated; and 

b. In light of the other statements made regarding transferring funds from 

Qualified Retirement Savings to purchase precious metals, failed to reveal conflicts of interest arising from Red Rock’s sales representatives’ profit share, commissions, and other compensation being tied to the amount of funds from customers’ Qualified Retirement Savings invested in precious metals including the RTH coins. 

199. Kelly, Spencer, and Red Rock, directly or by and through Red Rock’s 

sales representatives or other agents, made material misrepresentations regarding 

their mark-ups and fees, which included, but were not limited to, the following: 

a. Spencer and other Red Rock staff misled customers about the mark-ups by routinely telling customers that Red Rock “charge[s] one to five percent above our costs on common bullion assets,” despite knowing and failing to disclose that they were steering customers into “premium” products, 

specifically silver and gold RTH coins, which carried significantly higher mark-ups above 1% to 5%; 

b. Misrepresented how the company makes its money or commissions. For example, in August 2021, when prospective California Customer 2 asked 

how Red Rock makes its money or commission, a Red Rock sales representative told prospective California Customer 2 about the depository and administrative fees, but did not disclose the mark-up or commissions, even when this prospective customer asked the sales representative to confirm there wasn’t a percentage the company makes on the transaction. The sales representative stated, “No, it’s not like the financial institution 

that gets a percentage of your whole portfolio if it performs or not”; 

c. Misrepresented, in its Transaction Agreements until December of 2021, that the mark-up on Red Rock’s premium coins typically ranges between 4% and 29% when in reality, the mark-up on the majority of the premium coins it sold, including the silver and gold RTH coins, carried mark-ups of approximately 100% to 130%. Kelly chose the mark-ups on the sale of the RTH coins and had the authority and responsibility for determining what Red Rock told its clients and prospective clients about the mark-ups and fees on the RTH coins; 

 d. Misrepresented in its December 2021 revised Transaction Agreement that the mark-up on premium coins can range from 5% to 120%, when in reality, the mark-ups on the silver RTH coins routinely exceeded 120%; and 

e. Failed to disclose the mark-up on the gold and silver RTH coins to prospective customers during the Relevant Period. 

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200. Spencer and Red Rock, directly or by and through Red Rock’s sales 

representatives or other agents, made material misrepresentations regarding the 

precious metals it sold to customers, which included, but were not limited to, the 

following: 

a. Misrepresented that the value of the silver RTH coin was set by the RCM when it was not. For example, Spencer misrepresented to at least one customer that the value of the silver RTH coin was set by the RCM, and as such the re-salability and ROI were exceptionally, comparatively much stronger than the common one oz. assets, when it was not; 

b. Misrepresented there was a limited mintage population of the silver RTH coins when there was not. Spencer under reported the mintage population of the silver RTH coin to at least one customer to make it appear as if the product justified a higher price; 

c. Misrepresented to customers that the metals they bought from Red Rock were discounted when they were not; and 

d. Misrepresented the retail value of customers’ precious metals in its 

transaction agreements, on confirmation calls, and after the customer purchased the metals, lulling customers to keep their funds invested in the metals. For example, Spencer claimed that the current retail value is based 

on the metals’ spot price plus market demand, investor demand, and supply and demand when it is not. 

201. Through this scheme to defraud and these material misrepresentations 

and omissions, Defendants solicited customers to sell securities to ultimately gain 

access to those funds through the sale of RTH coins. The profits obtained by Red 

Rock and compensation paid to their sales representatives or other agents were 

related to the amount of Qualified Retirement Savings, including securities, that 

convinced customers to liquidate. 

202. The practices discussed in this section resulted in almost immediate 

substantial losses for customers due to Defendants’ scheme to defraud and material 

misrepresentations and omissions. 

203. The foregoing conduct in relation to all of Red Rock’s offers and sales 

during the Relevant Period (both cash and SDIRA sales) also violates California state 

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law prohibiting schemes to defraud and material misrepresentations or omissions in 

connection with the offer, purchase, or sale of commodities. 

M. Allegations Specific to Claims Brought by the State of Hawaii: 

Defendants Engaged in Fraud 

204. In February 2020, Hawaii Customer 1, age 72 at the time, was convinced 

by Red Rock’s sales representatives or other agents to liquidate a portion of his TSP 

account that held securities in order to purchase precious metals from Red Rock. 

205. Red Rock’s sales representatives or other agents assisted Hawaii 

Customer 1 with liquidating said securities and setting up a SDIRA with a third-party 

custodian. 

206. On March 24, 2020, Hawaii Customer 1 paid Red Rock $84,932.05 for 

3,630 silver RTH coins. Red Rock charged a mark-up of approximately 129% on the 

silver RTH coins Hawaii Customer 1 purchased. 

207. At no time prior to the sale did Red Rock disclose to Hawaii Customer 1 

that Red Rock would charge an approximately 129% mark-up on the silver RTH 

coins he purchased. 

208. As a result of its undisclosed mark-up, Red Rock kept $47,833.45 of the 

$84,932.05 Hawaii Customer 1 paid, while paying Wholesaler 1 only $37,098.60 for 

the RTH coins sold to Hawaii Customer 1. 

209. Hawaii Customer 1 had no experience purchasing precious metals at the 

time he purchased silver RTH coins from Red Rock. 

210. In late 2019, Hawaii Customer 2, age 73 at the time, was convinced by 

Red Rock’s sales representatives or other agents to liquidate a portion of her TSP 

account that held securities in order to purchase precious metals from Red Rock. 

211. Red Rock’s sales representatives or other agents assisted Hawaii 

Customer 2 with filling out paperwork to liquidate said securities and setting up a 

SDIRA with a third-party custodian. 

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212. On December 17, 2019, Hawaii Customer 2 paid Red Rock $47,618.38 

for 1,290 silver RTH coins and 40 gold RTH coins. Red Rock charged mark-ups of 

approximately 120% on both the silver and gold RTH coins Hawaii Customer 2 

purchased in December 2019. 

213. At no time prior to the sale did Red Rock disclose to Hawaii Customer 2 

that Red Rock would charge an approximately 120% mark-up on both the silver and 

gold RTH coins she purchased in December 2019. 

214. As a result of its undisclosed mark-ups, Red Rock kept $26,015.98 of the 

$47,618.38 Hawaii Customer 2 paid, while paying Wholesaler 1 only $21,602.40 for 

the RTH coins sold to Hawaii Customer 2. 

215. Thereafter, on March 25, 2020, Hawaii Customer 2 paid Red Rock 

$22,010.69 for 225 silver RTH coins and 40 gold RTH coins. Red Rock charged 

mark-ups of approximately 134% on the silver RTH coins and approximately 120% 

on the gold RTH coins Hawaii Customer 2 purchased in March 2020. 

216. At no time prior to the sale did Red Rock disclose to Hawaii Customer 2 

that Red Rock would charge mark-ups of approximately 134% and approximately 

120% on the silver and gold RTH coins she purchased in March 2020. 

217. As a result of its undisclosed mark-ups, Red Rock kept $12,147.84 of the 

$22,010.69 Hawaii Customer 2 paid, while paying Wholesaler 1 only $9,862.85 for 

the RTH coins sold to Hawaii Customer 2 in March 2020. 

218. Hawaii Customer 2 had no experience purchasing precious metals at 

the time she first purchased RTH coins from Red Rock in December 2019. 

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V. VIOLATIONS OF THE COMMODITY EXCHANGE ACT AND 

COMMISSION REGULATIONS 

(Brought by All Plaintiffs) 

COUNT 1 

Fraud 

Violations of Section 6(c)(1) of the 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) 

219. The allegations in the preceding paragraphs are realleged and 

incorporated herein by reference. 

220. 7 U.S.C. § 9(1) provides, in relevant part: 

It shall be unlawful for any person, directly or indirectly, to use 

or employ, or attempt to use or employ, in connection with any 

swap, or a contract of sale of any commodity in interstate commerce, or for future delivery on or subject to the rules of 

any registered entity, any manipulative or deceptive device or contrivance, in contravention of such rules and regulations as the commission shall promulgate . . . . 

221. 17 C.F.R § 180.1(a) provides, in relevant part: 

It shall be unlawful for any person, directly or indirectly, in connection with any swap, or contract of sale of any commodity 

in interstate commerce, or contract for future delivery on or subject to the rules of any registered entity, to intentionally or 

recklessly: 

(1) Use or employ, or attempt to use or employ, any 

manipulative device, scheme, or artifice to defraud; 

(2) Make, or attempt to make, any untrue or misleading statement of a material fact or to omit to state a material fact 

necessary in order to make the statements made not untrue or 

misleading; [or] 

(3) Engage, or attempt to engage, in any act, practice, or course of business, which operates or would operate as a fraud or deceit upon any person . . . . 

222. By reason of the conduct described above, Defendants, by and through 

Red Rock, its officers, employees, and agents, directly or indirectly, in connection 

with contracts of sale of commodities in interstate commerce, intentionally or 

recklessly violated 7 U.S.C. § 9(1) and 17 C.F.R. § 180.1(a)(1)-(3). 

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223. The acts, misrepresentations, omissions, and failures of Kelly, Spencer, 

and other officers, employees, and agents of Red Rock occurred within the scope of 

their employment, agency, or office with Red Rock. Therefore, Red Rock is liable 

for all of these acts and practices pursuant to 7 U.S.C. § 2(a)(1)(B) and 17 C.F.R. § 

1.2 (2022). 

224. During the Relevant Period, Kelly controlled Red Rock, directly or 

indirectly, and did not act in good faith or knowingly induced, directly or indirectly, 

Red Rock’s violations alleged in this count. Therefore, Kelly is liable for Red Rock’s 

conduct described herein pursuant to 7 U.S.C. § 13c(b). 

225. Each use or employment or attempted use or employment of any 

manipulative device, scheme, or artifice to defraud; untrue or misleading statement of 

fact, omission of material fact necessary to make statements not untrue or misleading; 

or act of engaging, or attempting to engage, in acts, practices or courses of business 

that operated or would have operated as a fraud or deceit on Red Rock’s customers is 

alleged as a separate and distinct violation of 7 U.S.C. § 9(1) and 17 C.F.R. 

§ 180.1(a)(1)-(3). 

VI. VIOLATIONS OF THE CALIFORNIA CORPORATION CODE 

(Brought by Plaintiff California Department of Financial Protection & Innovation) 

COUNT 2 

Commodities Fraud 

Violations of Cal. Corp. Code § 29536 

226. The allegations in the preceding paragraphs are re-alleged and 

incorporated herein by reference. 

227. California Corporations Code section 29536 provides: 

It is unlawful for any person, directly or indirectly, in 

connection with the purchase or sale of, the offer to sell, the offer to purchase, the offer to enter into, or the entry into, a 

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commodity, commodity contract, or commodity option to do any of the following: 

(a) To willfully employ any device, scheme, or artifice to 

defraud. 

(b) To willfully make any false report, enter any false record, make any untrue statement of a material fact, or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading. 

(c) To willfully engage in any transaction, act, practice, or 

course of business which operates or would operate as a fraud or deceit upon any persons. 

(d) To willfully misappropriate or convert the funds, security, or property of any other person. 

228. California Corporations Code section 29552 provides: Any person who materially assists in any violation of this law, or any rule or order of the commissioner under this law, is jointly and severally liable with any other person liable under this law for the violation. 

229. Under California Commodity Law of 1990 (CCL) (Cal. Corp. Code, § 

29500-29567) sections 29504 and 29515, precious metals including gold and silver 

coins are “commodities.”

230. Under CCL section 29505, a “commodity contract” means “any account, 

agreement, or contract for the purchase or sale, primarily for speculation or 

investment purposes and not for consumption by the offeree or purchaser . . . .”

231. During the Relevant Period, Red Rock, by and through its sales 

representatives and other agents, including Kelly and Spencer, offered to sell and 

sold, and offered to purchase and purchased, commodities and entered into 

commodity contracts from its principal place of business in California.

232. CCL section 29536 applies to the transactions, agreements, or contracts 

Defendants offered and sold. 

233. At all relevant times Defendants violated CCL section 29536 by the 

conduct described in this complaint including willfully employing a scheme to 

defraud customers out of their retirement savings by providing unlawful investment 

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advice to retirement aged customers stating that precious metals can protect 

retirement savings from stock market crashes and severe market corrections and 

customers can profit by transferring funds from their retirement accounts into 

SDIRAs to purchase precious metals. Kelly, Spencer, and Red Rock, directly or by 

and through Red Rock’s sales representatives and other agents, deceptively steered 

approximately 79% of all customers’ purchases to RTH coins, with undisclosed 

mark-ups (and customer losses) between approximately 100% and 130% on each 

sale. Defendants willfully misrepresented the mark-ups in the Transaction 

Agreements, on phone calls, and in emails, and failed to disclose the mark-ups. 

Alternatively: 

a. Red Rock violated CCL section 29536 and Kelly as Red Rock’s CEO knowingly controlled and induced, or knowingly substantially assisted Red Rock’s violations of 29536, by the conduct described in this complaint including: (1) hiring, training, and supervising sales representatives or other agents, (2) supervising the marketing department and approving Red Rock’s marketing materials disseminated to the public, (3) overseeing the transaction agreements Red Rock offered prospective customers, (4) choosing the metals that Red Rock sold to the public and the mark-up on the precious metals, (5) admonishing and counseling sales representatives who did not recommend the RTH coins with high commissions and mark- ups to prospective customers, and (6) misrepresenting and failing to disclose Red Rock’s approximately 100% to 130% mark-up on the RTH coins. 

 b. Red Rock violated CCL section 29536 and Spencer as a Red Rock Senior Account Executive knowingly substantially assisted Red Rock’s violations of 29536, by the conduct described in this complaint including: (1) training and assisting sales representatives or other agents, (2) advising prospective customers of the importance of gold and silver in their IRAs to protect against market drops or inflation, (3) steering clients into the RTH coins with undisclosed mark-ups ranging from approximately 100% to 130%; (4) misrepresenting that Red Rock had a direct relationship with the RCM when it did not; and (5) misleadingly informing customers that the markup on common bullion products was 1% to 5% when the markup on the coins Spencer recommended to these same clients were considered by Red Rock to be premium coins with marks-ups disclosed in the Transaction Agreement to be 5% to 120%, that in reality were approximately 100% to 130%. 

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COUNT 3 

Unlicensed Investment Advice 

Violations of Cal. Corp. Code § 25230 

234. The allegations in the preceding paragraphs are re-alleged and 

incorporated herein by reference. 

235. An “investment adviser” is defined under the Corporate Securities Law 

of 1968 (CSL) (Cal. Corp. Code, § 25000-25707) section 25009 in relevant part as 

“any person who, for compensation, engages in the business of advising others . . . as 

to the value of securities or as to the advisability of . . . selling securities . . . .” 

236. Corporations Code section 25230 provides, in relevant part: 

(a) It is unlawful for any investment adviser to conduct business 

as an investment adviser in this state unless the investment 

adviser has first applied for and secured from the commissioner 

a certificate, then in effect, authorizing the investment adviser to do so or unless the investment adviser is exempted by the 

provisions of Chapter 1 (commencing with Section 25200) of 

this part or unless the investment adviser is subject to Section 

25230.1. 

237. California Corporations Code section 25403 provides: 

(a) Every person who with knowledge directly or indirectly controls and induces any person to violate any provision of this 

division or any rule or order thereunder shall be deemed to be in 

violation of that provision, rule, or order to the same extent as 

the controlled and induced person. 

(b) Any person that knowingly provides substantial assistance to another person in violation of any provision of this division or any rule or order thereunder shall be deemed to be in 

violation of that provision, rule, or order to the same extent as 

the person to whom the assistance was provided. 

(c) It shall be unlawful for any person directly or indirectly to do any act or thing which would be unlawful for that person to do under any provision of this division or any rule or order 

thereunder through or by any other person. 

(d) Nothing in this section shall be construed to limit the power 

of the state to punish any person for any conduct which 

constitutes a crime under any other statute. 

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238. At all relevant times, Red Rock working from California conducted 

business as an investment adviser without a certificate from the Commissioner of the 

DFPI, or a valid exemption, in violation of CSL section 25230 by the conduct 

described in this complaint including comparing the stock market to the precious 

metals market, warning retirement-aged individuals that the stock market was volatile 

and due for a crash, and advising potential customers to purchase precious metals to 

preserve wealth and protect their investment because precious metals will profit. 

Defendants profited, and customers lost, when customers sold securities and 

purchased precious metals from Red Rock. Additionally: 

a. Red Rock violated CSL section 25230 and Kelly as Red Rock’s CEO knowingly controlled and induced, or knowingly substantially assisted, Red Rock’s violations of 25230, by the conduct described in this complaint including: (1) hiring, training, and supervising sales representatives or other agents, (2) supervising the marketing department and approving Red Rock’s marketing materials disseminated to the public, (3) overseeing the transaction agreements Red Rock offered to prospective customers, (4) advising potential clients of the importance of gold and silver in their IRAs to protect against market drops or inflation, (5) choosing the metals that Red Rock sold to the public and the mark-up on the precious metals, (6) admonishing and counseling sales representatives who did not recommend the RTH coins with high commissions and mark-ups to prospective customers, and (7) misrepresenting and failing to disclose Red Rock’s approximately 100% to 130% mark-up on the RTH coins. 

 b. Red Rock violated CSL section 25230 and Spencer as a Red Rock Senior Account Executive knowingly substantially assisted Red Rock’s violations of 25230, by the conduct described in this complaint including: (1) training and assisting sales representatives or other agents, (2) providing Red Rock’s marketing materials to prospective customers, (3) advising prospective customers of the importance of gold and silver in their IRAs to protect against market drops or inflation, (4) steering clients into the RTH coins with undisclosed mark-ups ranging from approximately 100% to 130%, (5) misrepresenting that Red Rock had a direct relationship with the RCM when it did not, and (6) misleadingly informing customers that the markup on common bullion products was 1% to 5% when the markup on the coins Spencer recommended to these same customers were considered by Red Rock to be premium coins with marks-ups disclosed in the Transaction Agreement to be 5% to 120%, that in reality carried mark-ups ranging from approximately 100% to 130%. 

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COUNT 4 

Investment Adviser Fraud 

Violations of Cal. Corp. Code § 25235 

239. The allegations in the preceding paragraphs are re-alleged and 

incorporated herein by reference. 

240. California Corporations Code section 25235 provides, in relevant part: 

It is unlawful for any investment adviser, directly or indirectly, in this state: 

(a) To employ any device, scheme, or artifice to defraud any client or prospective client. 

(b) To engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon any 

client or prospective client. 

241. At all relevant times, Red Rock, directly or by and through its sales 

representatives, violated CSL section 25235 by the conduct described in this 

complaint including operating a scheme to defraud customers out of their retirement 

savings by comparing the stock market to the precious metals market, warning 

retirement aged individuals that the stock market was volatile and due for a crash, and 

advising potential customers to purchase precious metals to preserve wealth and 

protect their investment because precious metals will profit. Red Rock, directly or by 

and through its sales representatives or other agents, deceptively steered 

approximately 79% of all customers’ purchases to RTH coins, with undisclosed 

mark-ups (and customer losses) between approximately 100% to 130% on each sale. 

Red Rock, directly or by and through its sales representatives or other agents, 

willfully misrepresented the mark-ups in the Transaction Agreements, on phone calls, 

and in emails, and failed to disclose the mark-ups. Defendants profited, and 

customers lost, when customers sold securities and purchased precious metals from 

Red Rock. Additionally: 

a. Red Rock violated CSL section 25235 and Kelly as Red Rock’s CEO knowingly controlled and induced, or knowingly substantially assisted, Red Rock’s violations of 29536, by the conduct described in this complaint including: (1) hiring, training, and supervising sales representatives or other 

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agents, (2) supervising the marketing department and approving Red Rock’s marketing materials disseminated to the public, (3) overseeing the transaction agreements Red Rock offered to prospective customers, (4) advising prospective customers of the importance of gold and silver in their IRAs to protect against market drops or inflation, (5) choosing the metals that Red Rock sold to the public and the mark-up on the precious metals, (6) admonishing and counseling sales representatives who did not recommend the RTH coins with high commissions and mark-ups to prospective customers, and (7) misrepresenting and failing to disclose Red Rock’s approximately 100% to 130% mark-up on the RTH coins. 

 b. Red Rock violated CSL section 25235 and Spencer as a Red Rock Senior Account Executive knowingly substantially assisted Red Rock’s violations of 29535, by the conduct described in this complaint including: (1) training, and assisting sales representatives or other agents, (2) providing Red Rock’s marketing materials to prospective customers, (3) advising prospective customers of the importance of gold and silver in their IRAs to protect against market drops or inflation, (4) steering clients into the RTH coins with undisclosed mark-ups ranging from approximately 100% to 130%, (5) misrepresenting that Red Rock had a direct relationship with the RCM when it did not, and (6) misleadingly informing customers that the markup on common bullion products was 1% to 5% when the markup on the coins Spencer recommended to these same clients were considered by Red Rock to be premium coins with marks-ups disclosed in the Transaction Agreement to be 5% to 120%, that in reality carried mark-ups ranging from approximately 100% to 130%. 

VII. VIOLATIONS OF THE HAWAII REVISED STATUTES 

(Brought by Plaintiff State of Hawaii, Department of Commerce and Consumer Affairs, Securities Enforcement Branch) 

COUNT 5 

Material Misrepresentations & Omissions 

in Connection with the Sale of a Security Violations of Hawaii Revised Statutes § 485A-501(a)(2) (2022) 

242. The allegations in the preceding paragraphs are re-alleged and 

incorporated herein by reference. 

243. Hawaii Revised Statutes § 485A-501(a)(2) makes it unlawful for a 

person, in connection with the offer, sale, or purchase of a security, directly or 

indirectly, to make an untrue statement of a material fact or to fail to state a material 

fact necessary to make the statements made, in light of the circumstances under 

which they were made, not misleading. 

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244. During the Relevant Period, Defendants, in connection with the sale of 

securities to Hawaii Customers 1 and 2, directly or indirectly, by and through their 

sales representatives or other agents, made untrue statements of material fact and 

failed to state material facts necessary in order to make the statements made, in light 

of the circumstances under which they were made, not misleading, as contained in the 

complaint. As a result of the material misrepresentations and omissions by 

Defendants, Hawaii Customers 1 and 2 liquidated the securities held in their 

respective retirement accounts, and used those funds to purchase precious metals 

from Defendants. The material misrepresentations and omissions resulted in 

Defendants converting a majority of the investment funds for their own benefit 

without the knowledge of Hawaii Customers 1 and 2. 

245. As a result of their conduct, Defendants violated Hawaii Revised 

Statutes § 485A-501(a)(2). 

COUNT 6 

Financial Exploitation of the Elderly Violations of Hawaii Revised Statutes § 485A-603.5 (2022) 

246. The allegations in the preceding paragraphs are re-alleged and 

incorporated herein by reference. 

247. Pursuant to Hawaii Revised Statutes § 485A-603.5, if a person commits 

a violation under this chapter and the violation is directed toward, targets, or is 

committed against a person who at the time of the violation is sixty-two years of age 

or older, a court, in addition to any other civil penalty, may impose a civil penalty not 

to exceed $50,000.00 for each violation; provided that this section shall not apply to 

registered broker-dealers for violations of § 485A-412(d)(9). 

248. Hawaii Customers 1 and 2 were both 62 years of age or older at the time 

Defendants committed violations against them, as described in Section M and Count 

5, above. 

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249. As a result of Defendants’ violations of Hawaii Revised Statutes § 

485A-501(a)(2), Defendants may be assessed and held liable for any additional 

penalties imposed against them by this Court pursuant to, and in accordance with, 

Hawaii Revised Statutes § 485A-603.5. 

VIII. RELIEF REQUESTED 

 The CFTC and the States respectfully request that this Court, as authorized by 

Sections 6c and 6d(1) of the CEA, 7 U.S.C. §§ 13a-1, 13a-2(1), and pursuant to its 

own equitable powers: 

A. Find that Defendants violated Section 6(c)(1) of the CEA, 7 U.S.C. § 9(1), and CFTC Regulation 180.1(a)(1)-(3), 17 C.F.R. § 180.1(a)(1)- (3) (2021); 

B. Find that Defendants violated the laws of the States as set forth above; 

C. Enter an order of permanent injunction enjoining Defendants and their affiliates, agents, servants, employees, successors, assigns, attorneys, and all persons in active concert with them, who receive actual notice of such order by personal service or otherwise, from engaging in the conduct described above, in violation of 7 U.S.C. § 9(1) and 17 C.F.R. § 180.1(a)(1)-(3) and the laws of the States; 

D. Enter an order of permanent injunction restraining and enjoining 

Defendants and their affiliates, agents, servants, employees, successors, assigns, attorneys, and all persons in active concert with them, from directly or indirectly: 

1) Trading on or subject to the rules of any registered entity (as that term 

is defined by Section 1a(40) of the CEA, 7 U.S.C. § 1a(40)); 

2) Entering into any transactions involving “commodity interests” (as 

that term is defined in CFTC Regulation 1.3, 17 C.F.R. § 1.3 (2022)), or precious metals that are commodities, as that term is defined herein, for accounts held in the name of any Defendant or for 

accounts in which any Defendant has a direct or indirect interest; 

3) Having any commodity interests or precious metals that are 

commodities, as that term is defined herein, traded on any Defendant’s behalf; 

4) Controlling or directing the trading for or on behalf of any other person or entity, whether by power of attorney or otherwise, in any account involving commodity interests or precious metals that are commodities, as that term is defined herein; 

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5) Soliciting, receiving, or accepting any funds from any person for the 

purpose of purchasing or selling of any commodity interests or precious metals that are commodities, as that term is defined herein; 

6) Applying for registration or claiming exemption from registration 

with the CFTC in any capacity, and engaging in any activity requiring such registration or exemption from registration with the 

CFTC except as provided for in CFTC Regulation 4.14(a)(9), 17 C.F.R. § 4.14(a)(9) (2022); 

7) Acting as a principal (as that term is defined in CFTC Regulation 3.1(a), 17 C.F.R. § 3.1(a) (2022)), agent, or any other officer or employee of any person registered, exempted from registration, or required to be registered with the CFTC except as provided for in 17 C.F.R. § 4.14(a)(9); 

8) Acting or associating with an investment adviser or investment 

adviser representative or broker-dealer, in violation of the laws of California; and 

9) In connection with offer, sale or purchase of any security, employing any device, scheme, or artifice to defraud another person, making any untrue statement of a material fact or omit to state a material fact 

necessary in order to make the statement made, in the light of the circumstances under which they were made, not misleading; or engaging in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in violation of the laws of the States. 

E. Enter an order directing Defendants as well as any third-party transferee and/or successors thereof, to disgorge, pursuant to such procedure as the Court may order, all benefits received including, but not limited to, salaries, commissions, loans, fees, revenues, and trading profits derived, directly or indirectly, from acts or practices that constitute violations of 

the CEA or CFTC Regulations or the laws of the States, as described herein, including pre-judgment and post-judgment interest; 

F. Enter an order requiring Defendants, as well as any successors thereof, to make full restitution to every person who has sustained losses proximately caused by the violations described herein, including prejudgment and post-judgment interest; 

G. Enter an order directing Defendants to rescind, pursuant to such procedures as the Court may order, all contracts and agreements, whether implied or express, entered into between Defendants and any of the customers whose funds were received by Defendants as a result of Defendants’ violations of the CEA or CFTC Regulations or the laws of the States as described herein; 

H. Enter an order directing Defendants to pay a civil monetary penalty assessed by the Court, in an amount not to exceed the penalty prescribed by Section 6c(d)(1) of the CEA, 7 U.S.C. § 13a-1(d)(1), as adjusted for inflation pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Pub. L. 114-74, tit. VII, § 701, 129 Stat. 584, 599-600, see CFTC Regulation 143.8, 17 C.F.R. § 143.8 (2022), for 

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each violation of the CEA or CFTC Regulations, and pay civil monetary penalties and/or damages pursuant to the laws of the States during the Relevant Period, described herein; 

I. Enter an order requiring Defendants to pay costs and fees as permitted by 28 U.S.C. §§ 1920 and 2413(a)(2) and the laws of the States; and 

J. Enter an order providing such other and further relief as the Court deems 

proper. 

IX. DEMAND FOR JURY TRIAL 

 Plaintiffs hereby demand a jury trial. 

I hereby attest that all other signatories listed, and on whose behalf the filing is 

submitted, concur in the filing’s content and have authorized the filing. 

Dated: May 15, 2023 Respectfully submitted, 

COMMODITY FUTURES 

TRADING COMMISSION 

By: /s/ James Holl 

JAMES HOLL 

California Bar No. 177885 

jholl@cftc.gov 

(202) 418-5311 

JAMES A. GARCIA, pro hac vice pending 

(Attorney-In-Charge) 

DC Bar No. 458085 

jgarcia@cftc.gov 

(202) 418-5362 

DANIEL C. JORDAN, pro hac vice pending

VA Bar No. 36382 

djordan@cftc.gov 

(202) 418-5339 

Attorneys for Plaintiff 

COMMODITY FUTURES 

TRADING COMMISSION 

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1155 21st Street, N.W. 

Washington, DC 20581 

FOR THE STATE OF CALIFORNIA 

By: /s/ Danielle Stoumbos 

CLOTHILDE V. HEWLETT 

Commissioner 

MARY ANN SMITH 

Deputy Commissioner 

AMY J. WINN 

Assistant Chief Counsel 

DANIELLE A. STOUMBOS 

California Bar No. 264784 

Telephone: (213) 503-2046 

Danielle.Stoumbos@dfpi.ca.gov 

JARI BINDER 

California Bar No. 333694 

Telephone: (415) 471-0919 

Jari.Binder@dfpi.ca.gov 

Attorneys for Plaintiff 

STATE OF CALIFORNIA 

DEPARTMENT OF FINANCIAL 

PROTECTION AND INNOVATION 

320 West Fourth Street, Suite 750 

Los Angeles, California 90013 

FOR THE STATE OF HAWAII 

By: /s/ Keola Fong 

KEOLA FONG, pro hac vice pending

Hawaii Bar No. 9855 

Telephone: (808) 586-2740 

kfong@dcca.hawaii.gov 

Attorney for Plaintiff 

STATE OF HAWAII 

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DEPARTMENT OF COMMERCE AND 

CONSUMER AFFAIRS 

SECURITIES ENFORCEMENT BRANCH 

335 Merchant Street, Room 205 

Honolulu, Hawaii 96813 

 

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