Real Estate Operators Settle SEC Charges
The Securities and Exchange Commission has announced the resolution of an enforcement action it filed on March 1, 2010 in federal district court in Massachusetts against several Massachusetts-based parties who offered real estate investments.
The court entered final judgments by consent against several defendants on January 10, 2012, and the SEC agreed to dismiss the case against certain of the other parties.
The SEC’s complaint charged Kathleen S. Dobens and Charles T. Dobens, husband and wife business partners from Duxbury, Massachusetts; their business partner, Joseph A. Roche of Braintree, Massachusetts; and four entities through which they operated (Silex Group, LLC, Preakness Apartments I & II, LLC, Cherry Hills Apartments of Fort Worth, LLC, and Clear River Partners, LLC).
The complaint alleged that the defendants committed securities law violations with respect to real estate investments that they offered. The SEC also charged four other entities as relief defendants.
Without admitting or denying the allegations in the SEC’s complaint, the three individual defendants agreed to the entry of final judgments that permanently enjoin them from violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; order the individual defendants to pay, jointly and severally, disgorgement of $284,399 plus prejudgment interest of $20,775; and order Kathleen S. Dobens and Charles T. Dobens to each pay a civil monetary penalty of $80,000, but not imposing any civil penalty against Roche based on the representations in Roche’s sworn statement of financial condition.
The settlement also ordered that any money, assets, or other benefit received by the individual defendants from their ownership interest in defendant Preakness Apartments I & II, LLC be applied toward partial satisfaction of the outstanding disgorgement orders against them; and ordered that the individual defendants comply with an undertaking forbidding them from having any control over expenditures made by or on behalf of Preakness Apartments I & II, LLC.
Three of the entity defendants (Silex Group, LLC, Cherry Hills Apartments of Forth Worth, LLC, and Clear River Partners, LLC), also agreed, without admitting or denying the allegations in the SEC’s complaint, to the entry of final judgments permanently enjoining each of them from violating Sections 5(a), 5(c) and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
Finally, the SEC agreed to dismiss its charges against defendant Preakness Apartments I & II, LLC and the relief defendants East Coast Investment Solutions, LLC, The Dobens Company, LLC, Crosscreeks Apartments I and Crosscreeks Apartments II, LLC.