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February 11, 2013

Real Estate LLC Ordered to Cease and Desist From Offering Securities on Website to Arizona Residents

By Jay Fishman, J.D.

The Arizona Corporation Commission (ACC), on January 14, 2013, issued an order requiring a limited liability company and its members (respondents) to cease and desist from violating the Arizona Securities Act (Act), comply with a consent order, and pay a $5,000 administrative penalty in connection with a fraudulent offer of securities to an Arizona resident (offeree) on the respondents' website. The respondents admitted the ACC's jurisdiction over the case and consented to the order but neither admitted nor denied the findings of fact and conclusions of law.

The respondents, on their website, publicly offered deeds of trust on residential real estate to the Arizona offeree. The respondents, however, were not registered as a dealer or salesmen in Arizona, and the offered securities were neither registered under the Act nor exempt from registration.

Also, the respondents failed to disclose on their website that: (1) they were subject to a July 19, 2012, cease and desist/administrative fine order by the Utah Securities Division for violating Utah Securities laws, making false statements in connection with securities offers and sales, and failing to disclose material information in connection with those offers and sales; (2) one of the respondents filed for Chapter 7 bankruptcy in 2009 that was discharged in 2010; and (3) the bankruptcy-filing respondent defaulted on nearly $2 million in mortgage debt owed for a residential property, resulting in a 2010 foreclosure.

Attorneys: Stacy Luedtke (Fidelity National Law Group) for Joshua Trent.

Companies: Real Estate Monster, LLC

LitigationEnforcement: Enforcement FraudManipulation SecuritiesOfferings ArizonaNews

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