SEC v. Christopher A. Faulkner; Homes Inc.; HOMESINC Renaissance, LLC; Matthew Rapoport; and Earl Nelson Davenport, No. LR-23979, Northern District of Texas (Nov. 3, 2017) — Press Release
raw: Christopher A. Faulkner, Homes Inc., HOMESINC Renaissance, LLC, Matthew Rapoport, and Earl Nelson Davenport
Christopher A. Faulkner, Homes Inc., HOMESINC Renaissance, LLC, Matthew Rapoport, and Earl Nelson Davenport, No. 3:17-cv-02405 (Nov. 3, 2017)
The U
The U.S. SEC charged Christopher A. Faulkner, Homes Inc., HOMESINC Renaissance, LLC, Matthew Rapoport, and Earl Nelson Davenport with orchestrating a fraudulent real estate scheme, falsely claiming to have a track record of profitable house flipping in Southern California and using investor funds for legitimate property transactions. In reality, the SEC alleged that no real estate purchases were made, and at least $168,750 from eight investors was misappropriated, with defendants using fabricated websites and false promotional materials to deceive investors. Faulkner, previously known as the “Frack Master” in an unrelated $80 million oil-and-gas fraud case, along with Rapoport and Davenport—who had prior state sanctions for securities violations—were charged with violating Sections 17(a) and 5 of the Securities Act and Section 10(b) and Rule 10b-5 of the Exchange Act. The court granted emergency injunctions freezing all defendants’ assets and prohibiting them from participating in securities offerings pending litigation. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains with interest, and civil penalties.
The U.S. SEC charged Christopher A. Faulkner, Homes Inc., HOMESINC Renaissance, LLC, Matthew Rapoport, and Earl Nelson Davenport with orchestrating a fraudulent real estate scheme, falsely claiming to have a track record of profitable house flipping in Southern California and using investor funds for legitimate property transactions. In reality, the SEC alleged that no real estate purchases were made, and at least $168,750 from eight investors was misappropriated, with defendants using fabricated websites and false promotional materials to deceive investors. Faulkner, previously known as the “Frack Master” in an unrelated $80 million oil-and-gas fraud case, along with Rapoport and Davenport—who had prior state sanctions for securities violations—were charged with violating Sections 17(a) and 5 of the Securities Act and Section 10(b) and Rule 10b-5 of the Exchange Act. The court granted emergency injunctions freezing all defendants’ assets and prohibiting them from participating in securities offerings pending litigation. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains with interest, and civil penalties. The U.S. Securities and Exchange Commission (SEC) obtained emergency injunctions against Christopher A. Faulkner, Homes Inc., HOMESINC Renaissance, LLC, Matthew Rapoport, and Earl Nelson Davenport for orchestrating a fraudulent real estate investment scheme falsely marketed as a proven house-flipping operation. The SEC alleged the defendants deceived at least eight investors into contributing $168,750 by fabricating a track record of successful property flips and misrepresenting that investor funds were used for real estate acquisitions and renovations—when in fact no such transactions occurred. Faulkner, known as the “Frack Master” in a separate $80 million oil-and-gas fraud case, along with Rapoport and Davenport (a previously sanctioned salesman), used misleading websites and promotional materials to conceal the scam. The SEC charged all defendants with violations of Sections 17(a) and 5 of the Securities Act and Section 10(b) and Rule 10b-5 of the Exchange Act, seeking permanent injunctions, disgorgement, prejudgment interest, and civil penalties. All defendants’ assets were frozen, and they were enjoined from further securities law violations pending litigation.
Extracted insights
- $80.00M $80 million $10M–$100M
- $169K $168,750 $100K–$1M
- person preliminary injunctions
- SEC obtains preliminary injunctions
- SEC obtains preliminary injunctions
- SEC files Civil Action No. 3:17-cv-02405-B
- Christopher A. Faulkner is defendant
- Homes Inc. is defendant
- HOMESINC Renaissance, LLC is defendant
- Matthew Rapoport is defendant
- Earl Nelson Davenport is defendant
- SEC alleges purported house flipping scheme
- Christopher A. Faulkner is Frack Master
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 23979 / November 3, 2017 Securities and Exchange Commission v. Christopher A. Faulkner, Homes Inc., HOMESINC Renaissance, LLC, Matthew Rapoport, and Earl Nelson Davenport, Civil Action No. 3:17-cv-02405-B (N.D. Tex. filed September 11, 2017) SEC Obtains Preliminary Injunctions Against "Frack Master" and Four Others in Purported House Flipping Scheme 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 scheme. 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 unsealed September 22, 2017 in the U.S. District Court for the Northern District of Texas, the Honorable Jane Boyle entered an ex parte order on September 14 granting a temporary restraining order, asset freeze, and other emergency and ancillary relief against Faulkner and Defendants Homes Inc. (Homes), HOMESINC Renaissance, LLC (Renaissance), Matthew Rapoport, and Earl Nelson Davenport. On September 28, 2017, the court entered an agreed preliminary injunction against Faulkner, Rapoport, and Davenport. On October 12, 2017, the court entered a preliminary injunction against Homes and Renaissance. These injunctions keep 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, which was filed under seal on September 11, 2017, Faulkner orchestrated a scheme involving Rapoport, Davenport, and others, to deceive and mislead investors about 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 are untrue, that Faulkner created and disseminated misleading promotional materials, and that Faulkner and Rapoport created and maintained a website that touted properties the company falsely claimed to have flipped in prior offerings. The SEC further alleges that 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 under Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint further charges Faulkner, Davenport, and Rapoport under Section 5 of the Securities Act. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against the defendants. In the alleged $80 million oil-and-gas fraud case - SEC v. Faulkner, et al., No. 3:16-CV-01735-D (N.D. Tex.) - the Honorable Sidney A. Fitzwater, on September 25, 2017, froze the assets of Faulkner and two others, appointed a temporary receiver over their assets, and preliminarily enjoined them from violating the antifraud provisions of the federal securities laws. The SEC's investigation into the alleged real estate scheme has been conducted by Kimberly Cain, Scott Mascianica, and John Devine, and supervised by Jim Etri and Jessica B. Magee of the Fort Worth Regional Office. The SEC's litigation is led by B. David Fraser and Timothy McCole.
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 23979 / November 3, 2017 Securities and Exchange Commission v. Christopher A. Faulkner, Homes Inc., HOMESINC Renaissance, LLC, Matthew Rapoport, and Earl Nelson Davenport, Civil Action No. 3:17-cv-02405-B (N.D. Tex. filed September 11, 2017) SEC Obtains Preliminary Injunctions Against "Frack Master" and Four Others in Purported House Flipping Scheme 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 scheme. 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 unsealed September 22, 2017 in the U.S. District Court for the Northern District of Texas, the Honorable Jane Boyle entered an ex parte order on September 14 granting a temporary restraining order, asset freeze, and other emergency and ancillary relief against Faulkner and Defendants Homes Inc. (Homes), HOMESINC Renaissance, LLC (Renaissance), Matthew Rapoport, and Earl Nelson Davenport. On September 28, 2017, the court entered an agreed preliminary injunction against Faulkner, Rapoport, and Davenport. On October 12, 2017, the court entered a preliminary injunction against Homes and Renaissance. These injunctions keep 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, which was filed under seal on September 11, 2017, Faulkner orchestrated a scheme involving Rapoport, Davenport, and others, to deceive and mislead investors about 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 are untrue, that Faulkner created and disseminated misleading promotional materials, and that Faulkner and Rapoport created and maintained a website that touted properties the company falsely claimed to have flipped in prior offerings. The SEC further alleges that 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 under Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint further charges Faulkner, Davenport, and Rapoport under Section 5 of the Securities Act. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against the defendants. In the alleged $80 million oil-and-gas fraud case - SEC v. Faulkner, et al., No. 3:16-CV-01735-D (N.D. Tex.) - the Honorable Sidney A. Fitzwater, on September 25, 2017, froze the assets of Faulkner and two others, appointed a temporary receiver over their assets, and preliminarily enjoined them from violating the antifraud provisions of the federal securities laws. The SEC's investigation into the alleged real estate scheme has been conducted by Kimberly Cain, Scott Mascianica, and John Devine, and supervised by Jim Etri and Jessica B. Magee of the Fort Worth Regional Office. The SEC's litigation is led by B. David Fraser and Timothy McCole.