The Securities and Exchange Commission has obtained court-ordered emergency relief to halt a real-estate scam perpetrated by Christopher A. Faulkner and four others. Faulkner is also the subject of another pending SEC enforcement action alleging he orchestrated an $80 million oil and gas investment scam. According to the complaint in that case, Faulkner disingenuously promoted himself as an oil-and-gas expert and marketed himself as the “Frack Master.”
In the alleged real estate scheme case that was recently unsealed in the U.S. District Court for the Northern District of Texas, the Court entered an agreed injunction, asset freeze, and other emergency and ancillary relief against Mr. Faulkner and Defendants Homes Inc. (Homes), HOMESINC Renaissance, LLC (Renaissance), Matthew Rapoport, and Earl Nelson Davenport. This injunction keeps the Defendants’ assets frozen and restrain and enjoin the defendants, during the pendency of the case, from violating the antifraud provisions of the federal securities laws and from participating, directly or indirectly, in the issuance, purchase, offer, or sale of any security.
According to the SEC’s complaint, Mr. Faulkner orchestrated a scheme involving Mr. Rapoport and Mr. Davenport, and others, to deceive and mislead investors about Mr. Faulkner’s latest venture, Homes, by claiming that it:
- had a proven and extensive track record of offering and selling passive real estate investments to investors;
- used investor funds for the acquisition, renovation, and re-sale of residential real estate in Southern California; and
- consistently produced double-digit returns to its investors.
The SEC alleges that these statements false, that Mr. Faulkner created and disseminated misleading promotional materials, and that he and Mr. Rapoport created and maintained a website that touted properties the company falsely claimed to have flipped in prior offerings. The SEC further alleges that Mr. Davenport, a salesman previously sanctioned by two states for unrelated securities-law violations, lied to investors about Homes’ track record and the purported past successes of Homes and Renaissance, which the Defendants falsely claimed was the latest in a series of Homes offerings. In reality, Renaissance was the only offering, and it was a scam, according to the SEC’s complaint. The SEC contends that Homes has raised at least $168,750 from at least eight investors, but has not used any investor funds for real-estate transactions.
The SEC’s complaint charges Faulkner, Rapoport, Davenport, Homes, and Renaissance with several violations of the Securities Act. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against the Defendants.
As successful oil and gas fraud attorneys we think that another and new investment scam is going to be in the real estate market. As such, we encourage everyone who is considering an investment in oil and gas or real estate to do your due diligence prior to writing a check.
We are here to help.
Mark A. Alexander
5080 Spectrum, Suite 850E
Addison, Texas 75001
Fax: 972. 421.1500