SEC Seeks to Halt Scheme of Raising Investor Funds under Guise of JOBS Act (with Lofchie Comment)

The SEC announced fraud charges against a Spokane Valley, WA, company and its owner for misleading investors with claims of raising billions of dollars of investment capital under the JOBS Act and investing it exclusively in American businesses.

According to the SEC's complaint filed in federal court in Spokane, Daniel F. Peterson and his company, USA Real Estate Fund 1, sold common stock in USA Real Estate Fund from November 2010 to June 2012 to more than 20 investors in Washington and at least five other states. In the e-mails and periodic e-newsletters which he used to solicit USA Real Estate Fund investors, Peterson said that he was preparing to raise billions of dollars in a second offering of additional "preferred" securities, which he claimed would be "secured" and have 10-year returns of up to 1,300 percent. Peterson claimed that two prominent Wall Street financial firms had partnered with him to bring his offering to market, and that the firms had conducted due diligence on USA Real Estate Fund and were structuring sales agreements and pricing. Peterson promised the early investors that they would profit massively once the purported future offering was underway.

According to the SEC, Peterson "has no guaranteed investment product to offer, the projected returns were either fictitious or based on implausible and unsupported analyses, and he has no affiliation with any financial firm to underwrite his purported future offering."

Lofchie Comment: This looks like about as plain-vanilla a fraud as there could be. It will be interesting to see whether opponents of the JOBS Act use this fraud as a weapon against the implementation of the Act. Realistically, this was not a fraud abetted by the JOBS Act.

See: SEC Press Release and Complaint.