SEC Charges Home and Construction Loan Firms with Fraud

Jack Humphrey, Regulatory journalist
August 15, 2012 /

The US Securities and Exchange Commission filed a civil injunctive action against Ivan Wade Brown and two companies he wholly owns and solely controls: Highland Residential, LLC and Avanti Capital Partners, LLC.

In its Complaint, filed in the U.S. District Court for the District of Utah, the SEC alleges that Brown raised over $27 million from at least 93 investors through the fraudulent and unregistered sale of promissory notes in Highland and Avanti.

Brown started selling unregistered promissory notes for Highland in 2004, and he formed Avanti in 2007 after the Utah Division of Securities investigated his and Highland’s conduct.

Brown represented to investors that Highland and Avanti would use investor funds to make secured bridge loans to individuals buying or building a residence under circumstances that he represented to investors would involve little-to-no risk.

Instead of using investor funds as represented, Brown used a significant portion of investor funds for his personal use, to make Ponzi payments, to invest in properties other than the ones he had identified, and to invest in other suspected frauds, including a mineral refiner, a movie production, and a dubious contract scheme where he attempted to insure real estate above market value.

Tanya Beard and Justin Sutherland conducted the Commission’s investigation; Dan Wadley and Tom Melton will lead the litigation.

 

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