Securities and Exchange Commission v. Avanti Capital Partners, LLC, et al, Civil No.: 2:12-cv-788-BCW (USDC Utah, Filed August 13, 2012).
SEC CHARGES HOME AND CONSTRUCTION LOAN COMPANIES AND THEIR PRINCIPAL WITH OFFERING FRAUD
Recently, the Securities and Exchange Commission filed a civil injunctive action against Ivan Wade Brown (Brown) and two companies he wholly owns and solely controls: Highland Residential, LLC (Highland) and Avanti Capital Partners, LLC (Avanti).
In its Complaint, filed in the U.S. District Court for the District of Utah, the Commission 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. By engaging in this conduct, Brown, Highland, and Avanti violated Sections 5(a), 5(c) and 17(a)(2) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5(b) thereunder.