SEC v. Dike Boone Nerren, No. 4:20-cv-00965, Eastern District of Texas (Dec. 21, 2020) — Complaint

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
________________________________________________
SECURITIES AND EXCHANGE COMMISSION, §
        §
 Plaintiff,      §
        §
v.        § Case No.: 20-cv-965
        §
DIKE BOONE NERREN,       §
        §
Defendant.      §
________________________________________________§

COMPLAINT

Plaintiff  Securities  and  Exchange  Commission  (“Commission”)  files  this  Complaint
against  Defendant  Dike    Boone  Nerren  (“Nerren”  or  “Defendant”),  and  respectfully  shows  the
Court as follows:
SUMMARY

1. From  late  2015  through  May  2017,  Nerren  and  others  raised  approximately  $1.4
million from 22 investors in two related offerings in order to acquire and develop a single family
subdivision for a real estate project in McKinney, Texas (the “McKinney Project”).  Contrary to
representations  in  the  offering  materials,  and  without  disclosure  to  investors,  Nerren  diverted
$450,000 of investor funds to a separate, unrelated real estate project in which he had an ownership
interest.  Although Nerren ultimately repaid the funds after being confronted by the developer of
the McKinney Project, the missing funds impeded the project by contributing to delays and higher
costs.
2. As  a  result  of  Nerren’s  unauthorized  use  of  funds,  the  McKinney  Project
experienced financial difficulties with subcontractors, cost overruns, and ultimately foreclosure,

Re:  SEC v. Dike Boone Nerren 2
Complaint
resulting in a total loss for all 22 investors.  By engaging in this conduct, Nerren violated Sections
17(a)(2) and 17(a)(3) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)].
JURISDICTION AND VENUE
3. The Court has jurisdiction over this action under Sections 20(b), 20(d), and 22(a)
of  the  Securities  Act  [15  U.S.C.  §§  77t(b),  77t(d)  and  77v(a)].    Venue  is  proper  in  this  District
because: (a) a substantial part of the events giving rise to the claims occurred in the Eastern District
of Texas, (b) the McKinney Project is located in this District, and (c) a majority of the investors
reside in this District.
4. The membership units and limited partnership units sold in this case are investment
contracts and, therefore, securities, under Section 2(a)(1) of the Securities Act.
5. In  connection  with  the  conduct  described  herein,  Nerren,  directly  or  indirectly,
made use of the mails or the means or instruments of transportation or communication in interstate
commerce.
PARTIES

6. Plaintiff is an agency of the United States government.
7. Dike Boone Nerren, age 62, is a resident of Coppell, Texas.  He was the managing
member  and  owner  of  a  company  that  operates  as  the  manager  of  various  real  estate  projects
(“Company A”).  Company A was the manager or co-manager of several related entities that raised
funds for and developed real estate projects, including Sapient Fund II, LLC (“SF II”) and Vintage
Place Fund, LP (“VPF”).

Re:  SEC v. Dike Boone Nerren 3
Complaint
FACTS
I. Sale of Securities

8. From November 2015 through May 2017, Nerren and others raised money to fund
the McKinney Project by selling investments in  SF  II  and  VPF.    Nerren and others offered and
sold to investors membership units in SF II and limited partnership units in VPF,  and investors
expected  to  derive  profits  solely from  the  efforts  of  Nerren and  the  other  managers  of  the
McKinney  Project.    Accordingly,  the  SFII  membership  units  and  VPF  limited  partnership  units
were passive investments and are securities under the federal securities laws.
9. Nerren and  others  solicited  investors  in  SF  II  and  VPF  using  private  placement
memoranda  (“PPMs”).    Nerren  supplied  information  for  the  PPMs  and  had  authority  over  the
documents before they were sent to potential investors.  The PPMs identified Nerren as part of the
management team of the McKinney Project through his ownership of Company A.  Nerren handled
day-to-day operations of the McKinney Project and secured additional bank financing.
10. The offering materials stated that SF II was formed to hold an ownership interest
in VPF and that VPF would acquire the land and develop the single-family subdivision.  The SF
II and VPF offering materials specified that investor funds would be used solely in connection with
the acquisition and development of the McKinney Project.
11. Through these two securities offerings, Nerren and others raised $1.1 million for
SF II and $300,000 for VPF.
II. Undisclosed Misuse of Investor Funds
12. Nerren was the primary signatory on bank accounts for Company A, the manager
of SF II.  Almost immediately after he began to raise funds through SF II and VPF, Nerren diverted
some of those funds to another project unrelated (“Unrelated Project”) to the McKinney Project.

Re:  SEC v. Dike Boone Nerren 4
Complaint
13. Between January 5 and May 9, 2016, Nerren diverted a total of $450,000 from SF
II and VPF to the Unrelated Project:
a. On January 5, 2016, Nerren sent $20,000 of McKinney Project investor funds
to a title company for a closing in the Unrelated Project.
b. In March 2016, Nerren withdrew $180,000 of McKinney Project investor funds
to cover expenses in the Unrelated Project.
c. On May 9, 2016, Nerren diverted an additional $250,000 of McKinney Project
investor funds to cover expenses in the Unrelated Project.
14. While  Nerren  was  diverting  investor  funds,  and  throughout  the  following  year,
Nerren  and  others  continued  to  raise  money  from  investors  in  SF  II  and  VPF  using  the  same
offering materials which specified that investor funds would be used solely in connection with the
McKinney Project.
15. Nerren’s repeated representations in offering documents that investor funds would
be used only for purposes related to the McKinney Project and the offering documents’ omission
of the actual diversion of investor funds were information that a reasonable investor would have
considered important in making her or his investment decision.
III. Status of the McKinney Project
16. In  February  2017,  the  developer  for  the  McKinney  Project  became  aware  of  the
missing $450,000 and questioned Nerren about the diverted funds.  In March 2017, Nerren began
to return the diverted funds, piecemeal, to McKinney Project accounts, but the repayment process
took more than two years.
17. Nevertheless,   at   least   as   early   as   June   2017,   the   McKinney   Project   was
experiencing  financial  difficulties  and  was  unable  to  pay  subcontractors  because  of  Nerren’s

Re:  SEC v. Dike Boone Nerren 5
Complaint
diversion of funds from the project.  Unpaid bills led to construction delays, which, in turn, led to
cost overruns for the McKinney Project.
18. In   May   2020,   the   lender   for   the   McKinney   Project   instituted   foreclosure
proceedings, resulting in a total loss for the SF II and VPF investors.  According to the McKinney
Project developer, the project would have been successfully completed but for Nerren’s diversion
of $450,000 from the project in 2016.
CLAIM FOR RELIEF
Violations of Section 17(a)(2) and (3) of the Securities Act [15 U.S.C. § 77q(a)(2) and (3)]

19. The Commission repeats and re-alleges Paragraphs 1 through 18 of the Complaint
as if fully set forth herein.
20. By engaging in the conduct described herein, Nerren, directly or indirectly, in the
offer or sale of securities, by use of the means or instrumentalities of interstate commerce or of the
mails,  and  at  least  negligently,  obtained  money  or  property  by  means  of  untrue  statements  of
material fact and/or omitted to state material facts necessary in order to make the statements made,
in light of the circumstances under which they were made, not misleading.
21. By engaging in the conduct described herein, Nerren, directly or indirectly, in the
offer or sale of securities, by use of the means or instrumentalities of interstate commerce or of the
mails, and at least negligently, engaged in transactions, practices, and/or courses of business which
operated as a fraud or deceit upon purchasers, prospective purchasers, and other persons.
22. By engaging in this conduct, Nerren violated, and unless enjoined will continue to
violate, Sections 17(a)(2) and (3).

Re:  SEC v. Dike Boone Nerren 6
Complaint
REQUEST FOR RELIEF
 For these reasons, the Commission respectfully requests that this Court enter a final
judgment:
1. permanently enjoining Dike Boone Nerren from violating, directly or indirectly, Sections
17(a)(2) and 17(a)(3) of the Securities Act;

2. ordering Dike Boone Nerren to pay civil penalties under Section 20(d) of the Securities
Act [15 U.S.C. § 77t(d)]; and

3. granting such additional relief as the Court deems just, appropriate, and equitable.

DATED:  December 21, 2020  Respectfully submitted,

Matthew J. Gulde
Illinois Bar No. 6272325
SECURITIES AND EXCHANGE COMMISSION
Burnett Plaza, Suite 1900
801 Cherry St., Unit #18
Fort Worth, TX 76102-6882
(817) 978-3821
(817) 978-4927 (fax)
[email protected]

ATTORNEY FOR PLAINTIFF
SECURITIES AND EXCHANGE COMMISSION

IN THE UNITED STATES DISTRICT COURT 
FOR THE EASTERN DISTRICT OF TEXAS 

SHERMAN DIVISION 
________________________________________________ 
SECURITIES AND EXCHANGE COMMISSION, § 
        §    
 Plaintiff,      § 
        § 
v.        § Case No.: 20-cv-965 
        § 
DIKE BOONE NERREN,     § 
        § 

Defendant.      § 
________________________________________________§ 
             

COMPLAINT 
 

Plaintiff Securities and Exchange Commission (“Commission”) files this Complaint 

against Defendant Dike Boone Nerren (“Nerren” or “Defendant”), and respectfully shows the 

Court as follows: 

SUMMARY 
 

1. From late 2015 through May 2017, Nerren and others raised approximately $1.4 

million from 22 investors in two related offerings in order to acquire and develop a single family 

subdivision for a real estate project in McKinney, Texas (the “McKinney Project”).  Contrary to 

representations in the offering materials, and without disclosure to investors, Nerren diverted 

$450,000 of investor funds to a separate, unrelated real estate project in which he had an ownership 

interest.  Although Nerren ultimately repaid the funds after being confronted by the developer of 

the McKinney Project, the missing funds impeded the project by contributing to delays and higher 

costs.   

2. As a result of Nerren’s unauthorized use of funds, the McKinney Project 

experienced financial difficulties with subcontractors, cost overruns, and ultimately foreclosure, 

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Re:  SEC v. Dike Boone Nerren 2 
Complaint 

resulting in a total loss for all 22 investors.  By engaging in this conduct, Nerren violated Sections 

17(a)(2) and 17(a)(3) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)]. 

JURISDICTION AND VENUE 

3. The Court has jurisdiction over this action under Sections 20(b), 20(d), and 22(a) 

of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d) and 77v(a)].  Venue is proper in this District 

because: (a) a substantial part of the events giving rise to the claims occurred in the Eastern District 

of Texas, (b) the McKinney Project is located in this District, and (c) a majority of the investors 

reside in this District.  

4. The membership units and limited partnership units sold in this case are investment 

contracts and, therefore, securities, under Section 2(a)(1) of the Securities Act. 

5. In connection with the conduct described herein, Nerren, directly or indirectly, 

made use of the mails or the means or instruments of transportation or communication in interstate 

commerce. 

PARTIES 
 

6. Plaintiff is an agency of the United States government.  

7. Dike Boone Nerren, age 62, is a resident of Coppell, Texas.  He was the managing 

member and owner of a company that operates as the manager of various real estate projects 

(“Company A”).  Company A was the manager or co-manager of several related entities that raised 

funds for and developed real estate projects, including Sapient Fund II, LLC (“SF II”) and Vintage 

Place Fund, LP (“VPF”).       

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Re:  SEC v. Dike Boone Nerren 3 
Complaint 

FACTS 

I. Sale of Securities 
 

8. From November 2015 through May 2017, Nerren and others raised money to fund 

the McKinney Project by selling investments in SF II and VPF.  Nerren and others offered and 

sold to investors membership units in SF II and limited partnership units in VPF, and investors 

expected to derive profits solely from the efforts of Nerren and the other managers of the 

McKinney Project.  Accordingly, the SFII membership units and VPF limited partnership units 

were passive investments and are securities under the federal securities laws. 

9. Nerren and others solicited investors in SF II and VPF using private placement 

memoranda (“PPMs”).  Nerren supplied information for the PPMs and had authority over the 

documents before they were sent to potential investors.  The PPMs identified Nerren as part of the 

management team of the McKinney Project through his ownership of Company A.  Nerren handled 

day-to-day operations of the McKinney Project and secured additional bank financing. 

10. The offering materials stated that SF II was formed to hold an ownership interest 

in VPF and that VPF would acquire the land and develop the single-family subdivision.  The SF 

II and VPF offering materials specified that investor funds would be used solely in connection with 

the acquisition and development of the McKinney Project. 

11. Through these two securities offerings, Nerren and others raised $1.1 million for 

SF II and $300,000 for VPF.  

II. Undisclosed Misuse of Investor Funds 

12. Nerren was the primary signatory on bank accounts for Company A, the manager 

of SF II.  Almost immediately after he began to raise funds through SF II and VPF, Nerren diverted 

some of those funds to another project unrelated (“Unrelated Project”) to the McKinney Project.   

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Re:  SEC v. Dike Boone Nerren 4 
Complaint 

13. Between January 5 and May 9, 2016, Nerren diverted a total of $450,000 from SF 

II and VPF to the Unrelated Project:   

a. On January 5, 2016, Nerren sent $20,000 of McKinney Project investor funds 

to a title company for a closing in the Unrelated Project. 

b. In March 2016, Nerren withdrew $180,000 of McKinney Project investor funds 

to cover expenses in the Unrelated Project. 

c. On May 9, 2016, Nerren diverted an additional $250,000 of McKinney Project 

investor funds to cover expenses in the Unrelated Project. 

14. While Nerren was diverting investor funds, and throughout the following year, 

Nerren and others continued to raise money from investors in SF II and VPF using the same 

offering materials which specified that investor funds would be used solely in connection with the 

McKinney Project. 

15. Nerren’s repeated representations in offering documents that investor funds would 

be used only for purposes related to the McKinney Project and the offering documents’ omission 

of the actual diversion of investor funds were information that a reasonable investor would have 

considered important in making her or his investment decision. 

III. Status of the McKinney Project 

16. In February 2017, the developer for the McKinney Project became aware of the 

missing $450,000 and questioned Nerren about the diverted funds.  In March 2017, Nerren began 

to return the diverted funds, piecemeal, to McKinney Project accounts, but the repayment process 

took more than two years. 

17. Nevertheless, at least as early as June 2017, the McKinney Project was 

experiencing financial difficulties and was unable to pay subcontractors because of Nerren’s 

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Re:  SEC v. Dike Boone Nerren 5 
Complaint 

diversion of funds from the project.  Unpaid bills led to construction delays, which, in turn, led to 

cost overruns for the McKinney Project.   

18. In May 2020, the lender for the McKinney Project instituted foreclosure 

proceedings, resulting in a total loss for the SF II and VPF investors.  According to the McKinney 

Project developer, the project would have been successfully completed but for Nerren’s diversion 

of $450,000 from the project in 2016.   

CLAIM FOR RELIEF 

Violations of Section 17(a)(2) and (3) of the Securities Act [15 U.S.C. § 77q(a)(2) and (3)] 
  

19. The Commission repeats and re-alleges Paragraphs 1 through 18 of the Complaint 

as if fully set forth herein. 

20. By engaging in the conduct described herein, Nerren, directly or indirectly, in the 

offer or sale of securities, by use of the means or instrumentalities of interstate commerce or of the 

mails, and at least negligently, obtained money or property by means of untrue statements of 

material fact and/or omitted to state material facts necessary in order to make the statements made, 

in light of the circumstances under which they were made, not misleading. 

21. By engaging in the conduct described herein, Nerren, directly or indirectly, in the 

offer or sale of securities, by use of the means or instrumentalities of interstate commerce or of the 

mails, and at least negligently, engaged in transactions, practices, and/or courses of business which 

operated as a fraud or deceit upon purchasers, prospective purchasers, and other persons. 

22. By engaging in this conduct, Nerren violated, and unless enjoined will continue to 

violate, Sections 17(a)(2) and (3).  

 

 

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Re:  SEC v. Dike Boone Nerren 6 
Complaint 

REQUEST FOR RELIEF 

 For these reasons, the Commission respectfully requests that this Court enter a final 

judgment: 

1. permanently enjoining Dike Boone Nerren from violating, directly or indirectly, Sections 
17(a)(2) and 17(a)(3) of the Securities Act; 

 
2. ordering Dike Boone Nerren to pay civil penalties under Section 20(d) of the Securities 

Act [15 U.S.C. § 77t(d)]; and 
 

3. granting such additional relief as the Court deems just, appropriate, and equitable. 
 

 

DATED:  December 21, 2020  Respectfully submitted,  

           
Matthew J. Gulde 
Illinois Bar No. 6272325 
SECURITIES AND EXCHANGE COMMISSION 
Burnett Plaza, Suite 1900 
801 Cherry St., Unit #18 
Fort Worth, TX 76102-6882 
(817) 978-3821 
(817) 978-4927 (fax) 
[email protected] 
 
ATTORNEY FOR PLAINTIFF 
SECURITIES AND EXCHANGE COMMISSION 

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