SEC v. Earl D. Miller; 5 Star Commercial, LLC; and 5 Star Capital Fund, LLC, No. 3:15-cv-00519, Northern District of Indiana (Nov. 12, 2015) — Complaint

UNITED STATES DISTRICT COURT 
NORTHERN DISTRICT OF INDIANA 
SOUTH BEND DIVISION 
__________________________________________ 
         )    
UNITED STATES SECURITIES      )  
AND EXCHANGE COMMISSION,    )   
         )   
  Plaintiff,      )    
         )   
v.   )   Case No. 15-cv- 
         )   
EARL D. MILLER,       )   
5 STAR COMMERCIAL,LLC, and     )    
5 STAR CAPITAL FUND, LLC,     )        
                    ) 
Defendants.       )   
         )   
         )   
 
COMPLAINT 
 
 Plaintiff United States Securities and Exchange Commission (the “SEC” or 
“Commission”) alleges as follows: 
1. This case centers on material misrepresentations made to investors – and a 
fraudulent scheme perpetrated – by Defendant Earl D. Miller and two private investment 
vehicles that he controlled, 5 Star Commercial, LLC (“5 Star Commercial”) and 5 Star 
Capital Fund, LLC (“5 Star Capital”). 
2. Miller has been in the business of real estate development and sales since 
2006. Starting in 2008 – despite having no experience in managing private investment funds  
–   Miller started recruiting investors for a number of private investment entities that he 
created.  Those private investment entities, in turn, were supposed to generate a return by 
investing in the building and/or rehabilitating of residential real estate (Miller’s “Real Estate 
Entities”).  
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3.  In approximately 2012, Miller started raising money for a new private 
investment fund – 5 Star Commercial.  As with his other Real Estate entities, 5 Star 
Commercial was supposed to invest investors’ money in various real estate projects.  Miller 
gained sole control of 5 Star Commercial in July 2014, and continued to solicit investor 
funds.  In February 2015, Miller branched out and created 5 Star Capital which was 
supposed to invest in “green energy saving product (sic) that save the average American 
consumer hundreds of dollars each year.” 
4. Miller recruited investors for 5 Star Commercial, 5 Star Capital and his other 
Real Estate entities from a network of predominantly novice investors, including members 
of the local Amish community.  
5. Miller has been enormously successful in exploiting this investor network. 
From at least July 29, 2014 to the present, he has raised at least $3.9 million from at least 70 
investors for his 5 Star Commercial and 5 Star Capital entities.
 
  
6. But, in raising those funds, Miller repeatedly lied to prospective investors. 
Through 5 Star Commercial, Miller lied to prospective investors in two critical instances. 
First, he falsely told investors that he would not get paid anything for managing the fund 
when, in reality, he misappropriated over $1 million from 5 Star Commercial investors for 
his personal use and to pay off a former business partner. Second, Miller and 5 Star 
Commercial informed investors that their money would be invested exclusively in real 
estate when, in reality, he invested and/or transferred over $391,000 of 5 Star Commercial’s 
funds into highly speculative, fledgling companies that purportedly made and marketed 
“green products.”  
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7. Miller similarly defrauded prospective investors in 5 Star Capital –   the fund 
that actually was supposed to invest in the purported “green” companies. Miller (a) told 
investors that 5 Star Capital owned patents on many of the “green”   products that he would 
be investing in, (b) assured investors that he would “manage risks” on behalf of 5 Star 
Capital, and (c) orally represented to at least one investor in 5 Star Capital that their money 
would be invested in real estate (just like Miller’s other entities). 
8. None of those representations was true. In reality, 5 Star Capital owned no 
“green product” patents, Miller performed virtually no due diligence into the purported 
“green” companies before handing them the lion’s share of 5 Star Capital’s assets, and – 
contrary to his oral representations to certain investors – the overwhelming majority of 5 
Star Capital’s assets were not invested in real estate.   
9. By making material misrepresentations and omissions to their investors, 
Miller, 5 Star Commercial and 5 Star Capital have committed securities fraud in violation of 
Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. 
§78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5] and Section 17(a) of the Securities 
Act of 1933 (the “Securities Act”) [15 U.S.C. § 77q(a)].  
10. 5 Star Commercial and 5 Star Capital benefited from defrauding their 
investors. By recruiting investors through fraudulent offering materials, they raised $2.28 
million and $1.62 million respectively between July 29, 2014 and the present. 
11. In addition, Miller personally benefitted from defrauding investors in 5 Star 
Commercial. Specifically, from July 29, 2014 to July 1, 2015, Miller has taken at least $1 
million from 5 Star Commercial and used it to pay himself and to pay off a personal debt to 
a former business partner.   
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12. The SEC brings this lawsuit to halt Defendants’ ongoing violations of the 
federal securities laws, to prevent further harm to investors, and to seek disgorgement and 
civil penalties stemming from Defendants’ wrongdoing, among other remedies. 
JURISDICTION AND VENUE 
13. The SEC brings this action pursuant to Section 20(b) of the Securities Act [15 
U.S.C. §77t(b)], and Sections 21(d) and 21(e) of the Exchange Act [15 U.S.C. §§78u(d) and 
78u(e)]. 
14. This Court has jurisdiction over this action pursuant to Section 22 of the 
Securities Act [15 U.S.C. § 77v] and Section 27 of the Exchange Act [15 U.S.C. § 78aa]. 
15. Venue is proper in this Court pursuant to Section 27 of the Exchange Act [15 
U.S.C. § 78aa]. Many of the acts, practices and courses of business constituting the 
violations alleged herein have occurred within the jurisdiction of the United States District 
Court for the Northern District of Indiana. 
16. Defendants reside and conduct business within the Northern District of 
Indiana. 
17. Defendants directly and indirectly made use of the means and 
instrumentalities of interstate commerce and of the mails in connection with the acts, 
practices, and courses of business alleged herein, and will continue to do so unless enjoined. 
DEFENDANTS 
 
18. Earl D. Miller, age 36, is a resident of Goshen, Indiana.  He has been the 
manager of 5 Star Commercial since 2012 and gained sole control in July 2014.  Miller also 
is the founder and manager of 5 Star Capital.  In January 2014, the State of Indiana 
Securities Division filed a complaint against Miller for selling over $1 million in 
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unregistered securities in another 5 Star entity, 5 Star Investment Group, LLC.  Miller 
entered into a consent agreement with the State of Indiana in April 2015 and agreed to pay 
a civil penalty of $5,000. Miller controls the day-to-day operations of – and has sole control 
over the investment decisions for – both 5 Star Commercial and 5 Star Capital. 
19. 5 Star Commercial, LLC, is an Indiana limited liability company, with its 
principal place of business in Mishawaka, Indiana.  5 Star Commercial purports to be in the 
business of investing in real estate.  To date, it has raised at least $2.28 million from at least 
45 investors in six states. The offer and sale of investment interests in 5 Star Commercial 
were not registered under Section 5 of the Securities Act; instead, they were purportedly 
offered and sold pursuant to a registration exemption under Securities Act Regulation D. 
20. 5 Star Capital Fund, LLC, is an Indiana limited liability company, with its 
principal place of business in Mishawaka, Indiana.  5 Star Capital purports to be an 
unregistered private investment fund that issues promissory notes to investors. To date, it 
has raised at least $1.62 million from at least 27 investors in three states. The offer and sale 
of investment interests in 5 Star Capital were not registered under Section 5 of the Securities 
Act; instead, they were purportedly offered and sold pursuant to a registration exemption 
under Securities Act Regulation D. 
FACTS 
Background: 
21. Earl Miller is an Indiana native who, since 2006, has made a career in real 
estate development and sales.   
22. Starting in 2008 -- despite having no experience in the financial services 
industry -- Miller branched out into the world of private investment management. He 
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opened a series of entities that took in money from private investors and then used it to 
make investments in real estate (the “Real Estate Entities”). 
23. Miller marketed his investment services to prospective investors with 
advertisements that boasted of “double digit annual returns” and encouraged investors to 
invest their 401K and IRA accounts in Miller’s entities. In promotional materials, Miller  
claimed that his Real Estate Entities owned more than $60 million in real estate and had 
over 300 private investors. 
24. Starting in July 2014, Miller took sole ownership in 5 Star Commercial, 
which he had managed since 2012, and in February 2015 created 5 Star Capital to further 
his efforts to solicit funds from individual investors and add to his stable of private 
investment vehicles. 
Miller’s Fundraising for 5 Star Commercial and 5 Star Capital: 
25. Miller encouraged people who trusted him to invest their money with 5 Star 
Commercial and 5 Star Capital. Many of Miller’s investors are financial novices. In 
addition, Miller has been very successful at gaining the trust of – and recruiting investors 
from –   the local Amish community. He has advertised his investment services in local 
Amish newspapers, has touted his Amish heritage, and has arranged community meetings 
with local Amish families to discuss his investment “opportunities.” 
26. From at least July 29, 2014 to date, Miller raised at least $3.9 million from at 
least 70 investors in 5 Star Capital and 5 Star Commercial.
 
 Miller convinced some of his 
victims to invest their retirement funds or a majority of their life savings with those entities. 
27. Investments in 5 Star Commercial and 5 Star Capital were solicited and 
obtained through the instrumentalities of interstate commerce. Investors came from at least 
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7   states and sent their investments to Miller through a variety of means, including wire 
transfer and the U.S. Mail. Miller communicated to investors through a variety of means 
including the telephone. 
28. In exchange for their investments, Miller, 5 Star Commercial and 5 Star 
Capital gave investors a promissory note with a fixed-rate of return ranging from 8% to  12% 
per year and paid monthly – far in excess of then-prevailing rates for bank deposits, CDs 
and other fixed-return investment vehicles.   
29. All of the investment interests in 5 Star Commercial and 5 Star Capital– 
offered and sold by Miller – are “securities” as that term is defined in Exchange Act Section 
3(a)(10) [15 U.S.C. § 78c(a)(10)] and Securities Act Section 2(a)(1) [15 U.S.C. § 77b(a)(1)]. 
Miller’s Fraudulent 5 Star Commercial Offering: 
30. Beginning in 2012, Miller was the manager of 5 Star Commercial and began 
raising funds for investments through 5 Star Commercial. 
31. Starting in July 2014, Miller gained sole control of 5 Star Commercial, and 
continued raising money for purported real estate investments. After July 2014, 5 Star 
Commercial issued promissory notes to investors and was supposed to use the proceeds 
from the notes to invest in residential and commercial real estate.   
32. From at least July 29, 2014 until the present, Miller and 5 Star Commercial 
raised approximately $2.2   million from at least 44 investors in 6 states.   
33. To recruit investors, Miller, on behalf of 5 Star Commercial, made oral 
representations to investors and also gave prospective investors written marketing materials 
relating to the company, including a Private Placement Memorandum (“PPM”).   
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34. Since July 2014, Miller was the sole manager and owner of 5 Star 
Commercial and he had ultimate authority over all statements made in the 5 Star 
Commercial PPM. On information and belief, Miller, at least, reviewed and approved the 
contents of the PPM before distributing it  to investors.  Miller’s name was on the front page 
of the PPM and he signed the promissory notes issued to 5 Star Commercial investors. 
35. The 5 Star Commercial PPM contained multiple misrepresentations about his 
compensation and use of funds.  
36. First, in the PPM, Miller and 5 Star Commercial represented that – although 
he would manage the company’s operations and investments – Miller “shall not be paid a 
salary or wages of any type by the Company.”  The PPM defined “The Company” as 5 Star 
Commercial. 
37. The representation regarding Miller’s compensation was false when made. In 
reality, Miller took payments of at least $365,435 from 5 Star Commercial between July 29, 
2014 and July 1, 2015.   
38. Second, 5 Star Commercial and Miller also misrepresented and/or omitted to 
state the true use of investor funds.  Neither 5 Star Commercial nor Miller disclosed that 
between July 29, 2014 and June 26, 2015, Miller used an additional $651,265 of 5 Star 
Commercial’s assets to pay his personal debt to a former business partner. 
39. Third, 5 Star Commercial and Miller represented throughout the PPM that 
investor funds would be used for the purchase and/or development of residential and 
commercial real estate. In reality, approximately $391,000 of investor funds were transferred 
to –   used to make highly risky investments in –   small, developmental stage companies that 
purportedly manufacture and sell “green products”   such as energy efficient wash machines. 
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These are the same investments made on behalf of Miller’s separate investment fund, 5 Star 
Capital, described below. But, unlike the prospectus for 5 Star Capital, the 5 Star 
Commercial prospectus does not mention that –   rather than investing in real estate – 
investors would be investing some of their principal with fledgling “green product” 
companies.  
40. As described in more detail below, Miller’s “green product” investments were 
made without even the most basic due diligence and the vast majority of those investments 
have defaulted in a short period of time. 
41. The misrepresentations and omissions identified in Paragraphs 21 through 40 
were material. In making an investment decision, a reasonable investor would consider it 
important that --   contrary to the PPM -- Miller was not working for free. Rather, Miller used 
over $1 million from 5 Star Commercial for his own personal benefit. In addition, investors 
would find it important that over $650,000 of the funds Miller misappropriated was used to 
pay off a former business partner who as of July 29, 2014, had no role with 5 Star 
Commercial.  
42. In addition, in making their investment decisions, reasonable investors would 
consider it important that a portion of their investment was not used as represented (i.e., to 
purchase and develop real estate), but rather was being transferred to or invested in, at best, 
speculative “green product” ventures.  
43. In making the material misrepresentations to investors in 5 Star Commercial 
identified in paragraphs 21 through 40, Miller and 5 Star Commercial acted with scienter. 
At the time he made the misrepresentations, Miller knew – or recklessly disregarded – that: 
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(a)  Contrary to the PPM, Miller took over $365,435 from an account in 5 
Star Commercial’s name – an account over which Miller had sole 
signatory authority –   and transferred it to his own personal account;  
(b) After July 29, 2014, he took an additional $645,816 out of the same 5 Star 
Commercial account that he controlled, and used it to pay off a former 
business partner who had no connection to 5 Star Commercial as of July 
29, 2014; 
(c) Contrary to the represented investment strategy in the 5 Star Commercial 
PPM, he directed approximately $391,000 out of 5 Star Commercial 
accounts to invest in purported “green product” companies with little or 
no record of generating profits. Miller had sole authority over managing 5 
Star Commercial’s investments. 
The Fraudulent 5 Star Capital Offering: 
44. In February 2015, Miller created a new investment vehicle, 5 Star Capital. 5 
Star Capital was a departure for Miller. Rather than investing in real estate, 5 Star Capital 
was supposed to invest its funds “into green energy saving product (sic) that save the 
average American consumer hundreds of dollars per year.”  
45. At the time of the 5 Star Capital offering, Miller was under investigation by 
the State of Indiana Securities Division for offering and selling unregistered securities. In 
April 2015, Miller entered into a consent decree and agreed to pay a $5,000 civil penalty. 
46. From February 1, 2015 to the present, Miller and 5 Star Capital have raised 
approximately $1.6 million from at least 25 investors in three states. Prospective investors in 
5 Star Capital were not told that Miller was the subject of an investigation into potential 
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securities law violations by the State of Indiana or that he entered a consent decree in 
response to charges that he violated state securities law. 
47. Following the same model as 5 Star Commercial, Miller and 5 Star Capital 
recruited investors through oral representations and also gave prospective investors written 
marketing materials relating to the Fund, including a PPM.  
48. Miller was the founder and sole owner of 5 Star Capital, and as such he had 
ultimate authority over all statements made in the 5 Star Capital PPM. On information and 
belief, Miller reviewed and approved the contents of the PPM before distributing them to 
investors.  Miller’s name is on the front page of the PPM and he signs the promissory notes 
issued to investors. 
49. The 5 Star Capital PPM contained multiple misrepresentations. First, after 
disclosing that the fund will invest in “green products,” the PPM states that “[t]he company 
owns patents on many of these products and will distribute them through large chain stores 
such as Bed Bath and Beyond.” 
50. The PPM also assured investors that – while their investment presented risks 
–   5 Star Capital (managed by Miller) “will do its best to manage these risks.” 
51. Miller also made oral misrepresentations to prospective investors about 5 Star 
Capital’s use of funds. In one-on-one meetings, Miller told at least one investor in 5 Star 
Capital that –   contrary to the 5 Star Capital PPM –   their funds would be used to purchase 
real estate (as they had with investments in Miller’s Real Estate Entities).  Miller led those 
investors to believe that –   as with the Miller’s Real Estate Entities –investors would 
personally receive a secured interest in any purchased real estate as a guarantee of their 
investment.   
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52. The representations identified in paragraphs 44 through 51 above were false 
when made.  First, despite 5 Star Capital’s and Miller’s claims, 5 Star Capital has never 
owned any patent for any products –   let alone “green products” that will be distributed 
“through large chain stores such as Bed Bath and Beyond.”   
53. Second, contrary to the PPM’s representation that Miller and 5 Star Capital 
would attempt to “manage risk,” Miller and 5 Star Capital Fund failed to take even the 
most rudimentary steps necessary to vet and secure investments made on behalf of investors. 
54. For example – for 5 Star Capital’s primary investments – Miller directed 
approximately $1.1 million in investor assets to several companies controlled by two 
individuals, Julius Toth (“Toth”) and Robert Foraker (“Foraker”).  The companies run by 
Toth and Foraker were, at best, fledgling enterprises with little or no track record. The 
entities were purportedly developing products ranging from a pedal operated wheelchair to 
energy efficient wash machines.  
55. While he purported to be “managing risk,” Miller invested the overwhelming 
majority of 5 Star Capital’s money with Toth and Foraker despite glaring red flags in their 
financial background. A rudimentary background search or credit report would have 
revealed that Toth has a past personal bankruptcy filing in 2001 that was not discharged 
until 2009, and that Foraker has seven previous civil judgments against him and former 
businesses he owned between 1996 and 2007. Miller either neglected to look into the 
background of Toth and Foraker or, in the alternative, knew about these red flags but 
recklessly invested 5 Star Capital’s assets with their entities. 
56. Similarly, Miller and 5 Star Capital performed virtually no due diligence on 
the “green” companies themselves.  Miller and 5 Star Capital transferred or invested $1.1 
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million of investor funds despite receiving no financial statements for Toth and Foraker’s 
entities, no detailed business plans, no sales statistics, contracts evidencing customer orders, 
or any other documents detailing the financial condition of the entities. 
57. To make matters worse –   and far from “managing risk” – Miller failed to even 
memorialize all of 5 Star Capital’s investments in Toth and Foraker’s companies. Out of the 
$1.1 million that 5 Star Capital invested with those companies, Miller failed to obtain a debt 
or equity instrument in return for $400,000 of 5 Star’s Capital’s investments. In short, Miller 
handed over $400,000 of 5 Star Capital’s money and did not receive any paperwork in 
return evidencing, or governing the terms of, that investment.   
58. Third, contrary to oral representations to certain investors, the overwhelming 
majority of 5 Star Capital’s assets was not invested in real estate and investors did not 
personally receive any form of security interest securing their investments. 
59. The misrepresentations identified in paragraphs 44 through 51 above were 
material. In making their investment decisions, reasonable investors would consider it 
important that: 
(a) contrary to the PPM, 5 Star Capital did not own any patents – let 
alone patents for “green products” poised for distribution through big-box 
retailers; 
(b) rather than taking prudent steps to “manage risk,” Miller had 
transferred or invested at least $1.1 million of the fund’s assets (i) with 
fledgling companies that had provided no detailed business plan or financial 
projections, (ii) owned by two individuals with a history of financial and legal 
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difficulties, and (iii) that, for $400,000 of 5 Star Capital’s investments, failed 
to properly memorialize the investments. 
60. In making the misrepresentations and omissions identified in paragraphs 44 
through 51 above, Miller and 5 Star Capital acted with scienter. At the time he made these 
misrepresentations, Miller knew – or recklessly disregarded – that: 
(a) He had performed no background check on Toth and Foraker before 
investing the majority of 5 Start Capital’s assets with their companies (or, 
alternatively, he knew about their backgrounds and yet recklessly 
proceeded with the investment); 
(b) He had performed virtually no due diligence into the “green product” 
entities before transferring or investing $1.1 million of 5 Star Capital’s 
assets; 
(c) Contrary to his representations in the 5 Star PPM, 5 Star Capital did not 
own any patents on any “green energy saving product”; and  
(d) Contrary to oral representations made to certain investors, 5 Star Capital 
invested primarily in the “green product” entities rather than real estate. 
The Purported “Green Product” Investments Fail and 5 Star Capital Stops Paying Its 
Investors: 
 
61. The vast majority of 5 Star Capital’s “investments”   in the “green product” 
companies operated by Toth and Foraker failed almost as soon as they were made; the rest 
have not generated any return to date. Of the $1.15 million that 5 Star Commercial and 5 
Star Capital transferred/invested, most of the funds were in the form of “loans” that were 
supposed to generate monthly interest payments.  Between March 2015 and July 2015, 
those payments were only $3,500 per month, and then the payments stopped entirely. All of 
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those loans are now in default. Even when payments were being made, the investments 
never generated income sufficient to meet 5 Star Capital’s interest obligations after March 
2015. 
62. As alleged in paragraphs 57 through 58 above, certain of 5 Star Capital’s 
investments were not memorialized and the terms governing those investments are 
unknown. In addition, the undocumented investments have never generated any revenue. 
63. In July 2015, in the wake of the failure of 5 Star Commercial and 5 Star 
Capital’s purported investments with Toth and Foraker, 5 Star Capital stopped making 
interest payments that were required under the terms of the investors’ promissory notes. 
Miller Invokes the Fifth Amendment in Response to Questions Posed by the SEC: 
64. On September 21, 2015, as part of its investigation into the securities law 
violations identified in this Complaint, the SEC issued an investigative subpoena to Miller 
requiring him to appear and provide testimony under oath to the SEC regarding the funds 
he raised from investors for, among other entities, 5 Star Capital and 5 Star Commercial. 
65. On October 23, 2015, rather than appear for testimony, Miller submitted a 
declaration to the SEC, confirming that he was asserting his Fifth Amendment right against 
self-incrimination and that, on that basis, he would refuse to answer any of the SEC’s 
questions regarding, among other topics: (a) 5 Star Capital; (b) 5 Star Commercial; (c) any 
representations Defendants made to investors and prospective investors; (d) Miller’s 
awareness of any fraudulent scheme related to 5 Star Capital and 5 Star Commercial; (e) 
Miller’s role in the creation of the PPMs, (f) Miller’s receipt, misappropriation or misuse of 
investor assets, (g) his financial condition, (h) any underlying transactions he effected on 
behalf of his entities, and (i) his relationships with – and communications with – investors.   
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COUNT I 
Violations of Section 10(b) of the Exchange Act, 
and Exchange Act Rule 10b-5 
(Against Miller, 5 Star Capital, and 5 Star Commercial) 
66. Paragraphs 1 through 65 are realleged and incorporated by reference. 
67. As more fully described in paragraphs 21 through 63, Defendants Miller, 5 
Star Capital and 5 Star Commercial, in connection with the purchase and sale of securities, 
by the use of the means and instrumentalities of interstate commerce and by the use of the 
mails, directly and indirectly: used and employed devices, schemes and artifices to defraud; 
made untrue statements of material fact and 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; and engaged in acts, practices and courses of business which 
operated or would have operated as a fraud and deceit upon purchasers and prospective 
purchasers  of securities. 
68. As described in more detail in paragraphs 43 through 60 above Defendants 
acted with scienter in that they knowingly or recklessly made the material 
misrepresentations and omissions and engaged in the fraudulent scheme identified above. 
69. By reason of the foregoing, Defendants Miller, 5 Star Capital and 5 Star 
Commercial violated Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5 
thereunder [17 C.F.R. 240.10b-5].  
COUNT II 
Violations of Section 17(a)(1) of the Securities Act 
(Against Miller, 5 Star Capital, and 5 Star Commercial) 
70. Paragraphs 1 through 65 are realleged and incorporated by reference as 
though fully set forth herein. 
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71. By engaging in the conduct described in paragraphs 21 through 63 above, 
Defendants Miller, 5 Star Capital and 5 Star Commercial in the offer and sale of securities, 
by the use of the means and instruments of interstate commerce, directly or indirectly, 
employed devices, schemes and artifices to defraud. 
72. Defendants Miller, 5 Star Capital and 5 Star Commercial intentionally or 
recklessly engaged in the devices, schemes, artifices, transactions, acts, practices and courses 
of business described above.  
73. By reason of the foregoing, Defendants Miller, 5 Star Capital and 5 Star 
Commercial violated Section 17(a)(1) of the Securities Act [15 U.S.C. § 77q(a)(1)]. 
COUNT III 
Violations of Sections 17(a)(2) and (3) of the Securities Act 
(Against Miller, 5 Star Capital, and 5 Star Commercial) 
74. Paragraphs 1  through 65 are realleged and incorporated by reference as 
though fully set forth herein. 
75. By engaging in the conduct described in paragraphs 21 through 63 above, 
Defendants Miller, 5 Star Capital and 5 Star Commercial, in the offer and sale of securities, 
by the use of the means and instruments of transportation or communication in interstate 
commerce or by use of the mails, directly or indirectly, have: 
a. obtained money or property by means of untrue statements of material 
fact or by omitting to state material facts necessary in order to make 
the statements made, in light of the circumstances under which they 
were made, not misleading; and  
b. engaged in transactions, practices, or courses of business that operated 
or would operate as a fraud or deceit upon the purchasers of such 
securities. 
76. Defendants Miller, 5 Star Capital and 5 Star Commercial made the untrue 
statements and omissions of material fact and engaged in the devices, schemes, artifices, 
transactions, acts, practices and courses of business described above. 
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77. By reason of the foregoing, Defendants Miller, 5 Star Capital and 5 Star 
Commercial have violated Sections 17(a)(2) and (3) of the Securities Act [15 U.S.C. § 
77q(a)(2)-(3)]. 
RELIEF REQUESTED 
 WHEREFORE, the Commission respectfully requests that this Court: 
I.  
 Issue findings of fact and conclusions of law that defendants committed the 
violations charged and alleged herein. 
II.  
 Enter an Order of Permanent Injunction restraining and enjoining Defendants 
Miller, 5 Star Capital and 5 Star Commercial, their officers, agents, servants, employees, 
attorneys and those persons in active concert or participation with defendants who receive 
actual notice of the Order, by personal service or otherwise, and each of them from, directly 
or indirectly, engaging in the transactions, acts, practices or courses of business described 
above, or in conduct of similar purport and object, in violation of Section 17(a) of the 
Securities Act [15 U.S.C. §§ 77q(a)], and Section 10(b) of the Exchange Act [15 U.S.C. § 
78j] and Rule 10b-5 [17 CFR § 240.10b-5] thereunder. 
III. 
Issue an Order requiring Defendants Miller, 5 Star Capital and 5 Star Commercial to 
disgorge the ill-gotten gains received as a result of the violations alleged in this Complaint, 
including prejudgment interest. 
IV. 
With regard to the Defendants’ violative acts, practices and courses of business set 
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forth herein, issue an Order imposing upon defendants appropriate civil penalties pursuant 
to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)], and Section 21(d)(3) of the 
Exchange Act [15 U.S.C. § 78u(d)(3)]. 
V. 
 Retain jurisdiction of this action in accordance with the principals of equity and the 
Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders 
and decrees that may be entered or to entertain any suitable application or motion for 
additional relief within the jurisdiction of this Court. 
VI. 
 Grant such other relief as this Court deems appropriate. 
 
JURY DEMAND 
 
 Pursuant to Rule 38 of the Federal Rules of Civil Procedure, the Commission hereby 
requests a trial by jury.  
     UNITED STATES SECURITIES 
     AND EXCHANGE COMMISSION 
 
/s/Amy S. Cotter ______   
 Timothy S. Leiman ([email protected])   
 Amy S. Cotter  (  [email protected])  
Jaclyn J. Janssen  (  [email protected]) 
     SECURITIES AND EXCHANGE COMMISSION 
     175 West Jackson Blvd., Suite 900 
     Chicago, IL  60604 
     (312) 353-7390 
     (312) 353-7398 (fax) 
 
Attorneys for Plaintiff 
 
USDC IN/ND case 3:15-cv-00519-JD-CAN   document 1   filed 11/05/15   page 19 of 19

UNITED STATES DISTRICT COURT 
NORTHERN DISTRICT OF INDIANA 

SOUTH BEND DIVISION 
__________________________________________ 
         )  
UNITED STATES SECURITIES      )  
AND EXCHANGE COMMISSION,    ) 
         ) 
  Plaintiff,      )  
         ) 

v.   ) Case No. 15-cv- 
         ) 
EARL D. MILLER,       ) 
5 STAR COMMERCIAL,LLC, and     )  
5 STAR CAPITAL FUND, LLC,     )      
                    ) 

Defendants.      ) 
         ) 
         ) 
 

COMPLAINT 
 

 Plaintiff United States Securities and Exchange Commission (the “SEC” or 

“Commission”) alleges as follows: 

1. This case centers on material misrepresentations made to investors – and a 

fraudulent scheme perpetrated – by Defendant Earl D. Miller and two private investment 

vehicles that he controlled, 5 Star Commercial, LLC (“5 Star Commercial”) and 5 Star 

Capital Fund, LLC (“5 Star Capital”). 

2. Miller has been in the business of real estate development and sales since 

2006. Starting in 2008 – despite having no experience in managing private investment funds  

– Miller started recruiting investors for a number of private investment entities that he 

created.  Those private investment entities, in turn, were supposed to generate a return by 

investing in the building and/or rehabilitating of residential real estate (Miller’s “Real Estate 

Entities”).  

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3.  In approximately 2012, Miller started raising money for a new private 

investment fund – 5 Star Commercial.  As with his other Real Estate entities, 5 Star 

Commercial was supposed to invest investors’ money in various real estate projects.  Miller 

gained sole control of 5 Star Commercial in July 2014, and continued to solicit investor 

funds.  In February 2015, Miller branched out and created 5 Star Capital which was 

supposed to invest in “green energy saving product (sic) that save the average American 

consumer hundreds of dollars each year.” 

4. Miller recruited investors for 5 Star Commercial, 5 Star Capital and his other 

Real Estate entities from a network of predominantly novice investors, including members 

of the local Amish community.  

5. Miller has been enormously successful in exploiting this investor network. 

From at least July 29, 2014 to the present, he has raised at least $3.9 million from at least 70 

investors for his 5 Star Commercial and 5 Star Capital entities.   

6. But, in raising those funds, Miller repeatedly lied to prospective investors. 

Through 5 Star Commercial, Miller lied to prospective investors in two critical instances. 

First, he falsely told investors that he would not get paid anything for managing the fund 

when, in reality, he misappropriated over $1 million from 5 Star Commercial investors for 

his personal use and to pay off a former business partner. Second, Miller and 5 Star 

Commercial informed investors that their money would be invested exclusively in real 

estate when, in reality, he invested and/or transferred over $391,000 of 5 Star Commercial’s 

funds into highly speculative, fledgling companies that purportedly made and marketed 

“green products.”  

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7. Miller similarly defrauded prospective investors in 5 Star Capital – the fund 

that actually was supposed to invest in the purported “green” companies. Miller (a) told 

investors that 5 Star Capital owned patents on many of the “green” products that he would 

be investing in, (b) assured investors that he would “manage risks” on behalf of 5 Star 

Capital, and (c) orally represented to at least one investor in 5 Star Capital that their money 

would be invested in real estate (just like Miller’s other entities). 

8. None of those representations was true. In reality, 5 Star Capital owned no 

“green product” patents, Miller performed virtually no due diligence into the purported 

“green” companies before handing them the lion’s share of 5 Star Capital’s assets, and – 

contrary to his oral representations to certain investors – the overwhelming majority of 5 

Star Capital’s assets were not invested in real estate.   

9. By making material misrepresentations and omissions to their investors, 

Miller, 5 Star Commercial and 5 Star Capital have committed securities fraud in violation of 

Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. 

§78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5] and Section 17(a) of the Securities 

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

10. 5 Star Commercial and 5 Star Capital benefited from defrauding their 

investors. By recruiting investors through fraudulent offering materials, they raised $2.28 

million and $1.62 million respectively between July 29, 2014 and the present. 

11. In addition, Miller personally benefitted from defrauding investors in 5 Star 

Commercial. Specifically, from July 29, 2014 to July 1, 2015, Miller has taken at least $1 

million from 5 Star Commercial and used it to pay himself and to pay off a personal debt to 

a former business partner.   

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12. The SEC brings this lawsuit to halt Defendants’ ongoing violations of the 

federal securities laws, to prevent further harm to investors, and to seek disgorgement and 

civil penalties stemming from Defendants’ wrongdoing, among other remedies. 

JURISDICTION AND VENUE 

13. The SEC brings this action pursuant to Section 20(b) of the Securities Act [15 

U.S.C. §77t(b)], and Sections 21(d) and 21(e) of the Exchange Act [15 U.S.C. §§78u(d) and 

78u(e)]. 

14. This Court has jurisdiction over this action pursuant to Section 22 of the 

Securities Act [15 U.S.C. § 77v] and Section 27 of the Exchange Act [15 U.S.C. § 78aa]. 

15. Venue is proper in this Court pursuant to Section 27 of the Exchange Act [15 

U.S.C. § 78aa]. Many of the acts, practices and courses of business constituting the 

violations alleged herein have occurred within the jurisdiction of the United States District 

Court for the Northern District of Indiana. 

16. Defendants reside and conduct business within the Northern District of 

Indiana. 

17. Defendants directly and indirectly made use of the means and 

instrumentalities of interstate commerce and of the mails in connection with the acts, 

practices, and courses of business alleged herein, and will continue to do so unless enjoined. 

DEFENDANTS 
 

18. Earl D. Miller, age 36, is a resident of Goshen, Indiana.  He has been the 

manager of 5 Star Commercial since 2012 and gained sole control in July 2014.  Miller also 

is the founder and manager of 5 Star Capital.  In January 2014, the State of Indiana 

Securities Division filed a complaint against Miller for selling over $1 million in 

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 5 

unregistered securities in another 5 Star entity, 5 Star Investment Group, LLC.  Miller 

entered into a consent agreement with the State of Indiana in April 2015 and agreed to pay 

a civil penalty of $5,000. Miller controls the day-to-day operations of – and has sole control 

over the investment decisions for – both 5 Star Commercial and 5 Star Capital. 

19. 5 Star Commercial, LLC, is an Indiana limited liability company, with its 

principal place of business in Mishawaka, Indiana.  5 Star Commercial purports to be in the 

business of investing in real estate.  To date, it has raised at least $2.28 million from at least 

45 investors in six states. The offer and sale of investment interests in 5 Star Commercial 

were not registered under Section 5 of the Securities Act; instead, they were purportedly 

offered and sold pursuant to a registration exemption under Securities Act Regulation D. 

20. 5 Star Capital Fund, LLC, is an Indiana limited liability company, with its 

principal place of business in Mishawaka, Indiana.  5 Star Capital purports to be an 

unregistered private investment fund that issues promissory notes to investors. To date, it 

has raised at least $1.62 million from at least 27 investors in three states. The offer and sale 

of investment interests in 5 Star Capital were not registered under Section 5 of the Securities 

Act; instead, they were purportedly offered and sold pursuant to a registration exemption 

under Securities Act Regulation D. 

FACTS 

Background: 

21. Earl Miller is an Indiana native who, since 2006, has made a career in real 

estate development and sales.   

22. Starting in 2008 -- despite having no experience in the financial services 

industry -- Miller branched out into the world of private investment management. He 

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opened a series of entities that took in money from private investors and then used it to 

make investments in real estate (the “Real Estate Entities”). 

23. Miller marketed his investment services to prospective investors with 

advertisements that boasted of “double digit annual returns” and encouraged investors to 

invest their 401K and IRA accounts in Miller’s entities. In promotional materials, Miller  

claimed that his Real Estate Entities owned more than $60 million in real estate and had 

over 300 private investors. 

24. Starting in July 2014, Miller took sole ownership in 5 Star Commercial, 

which he had managed since 2012, and in February 2015 created 5 Star Capital to further 

his efforts to solicit funds from individual investors and add to his stable of private 

investment vehicles. 

Miller’s Fundraising for 5 Star Commercial and 5 Star Capital: 

25. Miller encouraged people who trusted him to invest their money with 5 Star 

Commercial and 5 Star Capital. Many of Miller’s investors are financial novices. In 

addition, Miller has been very successful at gaining the trust of – and recruiting investors 

from – the local Amish community. He has advertised his investment services in local 

Amish newspapers, has touted his Amish heritage, and has arranged community meetings 

with local Amish families to discuss his investment “opportunities.” 

26. From at least July 29, 2014 to date, Miller raised at least $3.9 million from at 

least 70 investors in 5 Star Capital and 5 Star Commercial.  Miller convinced some of his 

victims to invest their retirement funds or a majority of their life savings with those entities. 

27. Investments in 5 Star Commercial and 5 Star Capital were solicited and 

obtained through the instrumentalities of interstate commerce. Investors came from at least 

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7 states and sent their investments to Miller through a variety of means, including wire 

transfer and the U.S. Mail. Miller communicated to investors through a variety of means 

including the telephone. 

28. In exchange for their investments, Miller, 5 Star Commercial and 5 Star 

Capital gave investors a promissory note with a fixed-rate of return ranging from 8% to  12% 

per year and paid monthly – far in excess of then-prevailing rates for bank deposits, CDs 

and other fixed-return investment vehicles.   

29. All of the investment interests in 5 Star Commercial and 5 Star Capital– 

offered and sold by Miller – are “securities” as that term is defined in Exchange Act Section 

3(a)(10) [15 U.S.C. § 78c(a)(10)] and Securities Act Section 2(a)(1) [15 U.S.C. § 77b(a)(1)]. 

Miller’s Fraudulent 5 Star Commercial Offering: 

30. Beginning in 2012, Miller was the manager of 5 Star Commercial and began 

raising funds for investments through 5 Star Commercial. 

31. Starting in July 2014, Miller gained sole control of 5 Star Commercial, and 

continued raising money for purported real estate investments. After July 2014, 5 Star 

Commercial issued promissory notes to investors and was supposed to use the proceeds 

from the notes to invest in residential and commercial real estate.   

32. From at least July 29, 2014 until the present, Miller and 5 Star Commercial 

raised approximately $2.2 million from at least 44 investors in 6 states.   

33. To recruit investors, Miller, on behalf of 5 Star Commercial, made oral 

representations to investors and also gave prospective investors written marketing materials 

relating to the company, including a Private Placement Memorandum (“PPM”).   

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34. Since July 2014, Miller was the sole manager and owner of 5 Star 

Commercial and he had ultimate authority over all statements made in the 5 Star 

Commercial PPM. On information and belief, Miller, at least, reviewed and approved the 

contents of the PPM before distributing it to investors.  Miller’s name was on the front page 

of the PPM and he signed the promissory notes issued to 5 Star Commercial investors. 

35. The 5 Star Commercial PPM contained multiple misrepresentations about his 

compensation and use of funds.  

36. First, in the PPM, Miller and 5 Star Commercial represented that – although 

he would manage the company’s operations and investments – Miller “shall not be paid a 

salary or wages of any type by the Company.”  The PPM defined “The Company” as 5 Star 

Commercial. 

37. The representation regarding Miller’s compensation was false when made. In 

reality, Miller took payments of at least $365,435 from 5 Star Commercial between July 29, 

2014 and July 1, 2015.   

38. Second, 5 Star Commercial and Miller also misrepresented and/or omitted to 

state the true use of investor funds.  Neither 5 Star Commercial nor Miller disclosed that 

between July 29, 2014 and June 26, 2015, Miller used an additional $651,265 of 5 Star 

Commercial’s assets to pay his personal debt to a former business partner. 

39. Third, 5 Star Commercial and Miller represented throughout the PPM that 

investor funds would be used for the purchase and/or development of residential and 

commercial real estate. In reality, approximately $391,000 of investor funds were transferred 

to – used to make highly risky investments in – small, developmental stage companies that 

purportedly manufacture and sell “green products” such as energy efficient wash machines. 

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These are the same investments made on behalf of Miller’s separate investment fund, 5 Star 

Capital, described below. But, unlike the prospectus for 5 Star Capital, the 5 Star 

Commercial prospectus does not mention that – rather than investing in real estate – 

investors would be investing some of their principal with fledgling “green product” 

companies.  

40. As described in more detail below, Miller’s “green product” investments were 

made without even the most basic due diligence and the vast majority of those investments 

have defaulted in a short period of time. 

41. The misrepresentations and omissions identified in Paragraphs 21 through 40 

were material. In making an investment decision, a reasonable investor would consider it 

important that -- contrary to the PPM -- Miller was not working for free. Rather, Miller used 

over $1 million from 5 Star Commercial for his own personal benefit. In addition, investors 

would find it important that over $650,000 of the funds Miller misappropriated was used to 

pay off a former business partner who as of July 29, 2014, had no role with 5 Star 

Commercial.  

42. In addition, in making their investment decisions, reasonable investors would 

consider it important that a portion of their investment was not used as represented (i.e., to 

purchase and develop real estate), but rather was being transferred to or invested in, at best, 

speculative “green product” ventures.  

43. In making the material misrepresentations to investors in 5 Star Commercial 

identified in paragraphs 21 through 40, Miller and 5 Star Commercial acted with scienter. 

At the time he made the misrepresentations, Miller knew – or recklessly disregarded – that: 

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(a)  Contrary to the PPM, Miller took over $365,435 from an account in 5 

Star Commercial’s name – an account over which Miller had sole 

signatory authority – and transferred it to his own personal account;  

(b) After July 29, 2014, he took an additional $645,816 out of the same 5 Star 

Commercial account that he controlled, and used it to pay off a former 

business partner who had no connection to 5 Star Commercial as of July 

29, 2014; 

(c) Contrary to the represented investment strategy in the 5 Star Commercial 

PPM, he directed approximately $391,000 out of 5 Star Commercial 

accounts to invest in purported “green product” companies with little or 

no record of generating profits. Miller had sole authority over managing 5 

Star Commercial’s investments. 

The Fraudulent 5 Star Capital Offering: 

44. In February 2015, Miller created a new investment vehicle, 5 Star Capital. 5 

Star Capital was a departure for Miller. Rather than investing in real estate, 5 Star Capital 

was supposed to invest its funds “into green energy saving product (sic) that save the 

average American consumer hundreds of dollars per year.”  

45. At the time of the 5 Star Capital offering, Miller was under investigation by 

the State of Indiana Securities Division for offering and selling unregistered securities. In 

April 2015, Miller entered into a consent decree and agreed to pay a $5,000 civil penalty. 

46. From February 1, 2015 to the present, Miller and 5 Star Capital have raised 

approximately $1.6 million from at least 25 investors in three states. Prospective investors in 

5 Star Capital were not told that Miller was the subject of an investigation into potential 

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 11 

securities law violations by the State of Indiana or that he entered a consent decree in 

response to charges that he violated state securities law. 

47. Following the same model as 5 Star Commercial, Miller and 5 Star Capital 

recruited investors through oral representations and also gave prospective investors written 

marketing materials relating to the Fund, including a PPM.  

48. Miller was the founder and sole owner of 5 Star Capital, and as such he had 

ultimate authority over all statements made in the 5 Star Capital PPM. On information and 

belief, Miller reviewed and approved the contents of the PPM before distributing them to 

investors.  Miller’s name is on the front page of the PPM and he signs the promissory notes 

issued to investors. 

49. The 5 Star Capital PPM contained multiple misrepresentations. First, after 

disclosing that the fund will invest in “green products,” the PPM states that “[t]he company 

owns patents on many of these products and will distribute them through large chain stores 

such as Bed Bath and Beyond.” 

50. The PPM also assured investors that – while their investment presented risks 

– 5 Star Capital (managed by Miller) “will do its best to manage these risks.” 

51. Miller also made oral misrepresentations to prospective investors about 5 Star 

Capital’s use of funds. In one-on-one meetings, Miller told at least one investor in 5 Star 

Capital that – contrary to the 5 Star Capital PPM – their funds would be used to purchase 

real estate (as they had with investments in Miller’s Real Estate Entities).  Miller led those 

investors to believe that – as with the Miller’s Real Estate Entities –investors would 

personally receive a secured interest in any purchased real estate as a guarantee of their 

investment.   

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 12 

52. The representations identified in paragraphs 44 through 51 above were false 

when made.  First, despite 5 Star Capital’s and Miller’s claims, 5 Star Capital has never 

owned any patent for any products – let alone “green products” that will be distributed 

“through large chain stores such as Bed Bath and Beyond.”   

53. Second, contrary to the PPM’s representation that Miller and 5 Star Capital 

would attempt to “manage risk,” Miller and 5 Star Capital Fund failed to take even the 

most rudimentary steps necessary to vet and secure investments made on behalf of investors. 

54. For example – for 5 Star Capital’s primary investments – Miller directed 

approximately $1.1 million in investor assets to several companies controlled by two 

individuals, Julius Toth (“Toth”) and Robert Foraker (“Foraker”).  The companies run by 

Toth and Foraker were, at best, fledgling enterprises with little or no track record. The 

entities were purportedly developing products ranging from a pedal operated wheelchair to 

energy efficient wash machines.  

55. While he purported to be “managing risk,” Miller invested the overwhelming 

majority of 5 Star Capital’s money with Toth and Foraker despite glaring red flags in their 

financial background. A rudimentary background search or credit report would have 

revealed that Toth has a past personal bankruptcy filing in 2001 that was not discharged 

until 2009, and that Foraker has seven previous civil judgments against him and former 

businesses he owned between 1996 and 2007. Miller either neglected to look into the 

background of Toth and Foraker or, in the alternative, knew about these red flags but 

recklessly invested 5 Star Capital’s assets with their entities. 

56. Similarly, Miller and 5 Star Capital performed virtually no due diligence on 

the “green” companies themselves.  Miller and 5 Star Capital transferred or invested $1.1 

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million of investor funds despite receiving no financial statements for Toth and Foraker’s 

entities, no detailed business plans, no sales statistics, contracts evidencing customer orders, 

or any other documents detailing the financial condition of the entities. 

57. To make matters worse – and far from “managing risk” – Miller failed to even 

memorialize all of 5 Star Capital’s investments in Toth and Foraker’s companies. Out of the 

$1.1 million that 5 Star Capital invested with those companies, Miller failed to obtain a debt 

or equity instrument in return for $400,000 of 5 Star’s Capital’s investments. In short, Miller 

handed over $400,000 of 5 Star Capital’s money and did not receive any paperwork in 

return evidencing, or governing the terms of, that investment.   

58. Third, contrary to oral representations to certain investors, the overwhelming 

majority of 5 Star Capital’s assets was not invested in real estate and investors did not 

personally receive any form of security interest securing their investments. 

59. The misrepresentations identified in paragraphs 44 through 51 above were 

material. In making their investment decisions, reasonable investors would consider it 

important that: 

(a) contrary to the PPM, 5 Star Capital did not own any patents – let 

alone patents for “green products” poised for distribution through big-box 

retailers; 

(b) rather than taking prudent steps to “manage risk,” Miller had 

transferred or invested at least $1.1 million of the fund’s assets (i) with 

fledgling companies that had provided no detailed business plan or financial 

projections, (ii) owned by two individuals with a history of financial and legal 

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difficulties, and (iii) that, for $400,000 of 5 Star Capital’s investments, failed 

to properly memorialize the investments. 

60. In making the misrepresentations and omissions identified in paragraphs 44 

through 51 above, Miller and 5 Star Capital acted with scienter. At the time he made these 

misrepresentations, Miller knew – or recklessly disregarded – that: 

(a) He had performed no background check on Toth and Foraker before 

investing the majority of 5 Start Capital’s assets with their companies (or, 

alternatively, he knew about their backgrounds and yet recklessly 

proceeded with the investment); 

(b) He had performed virtually no due diligence into the “green product” 

entities before transferring or investing $1.1 million of 5 Star Capital’s 

assets; 

(c) Contrary to his representations in the 5 Star PPM, 5 Star Capital did not 

own any patents on any “green energy saving product”; and  

(d) Contrary to oral representations made to certain investors, 5 Star Capital 

invested primarily in the “green product” entities rather than real estate. 

The Purported “Green Product” Investments Fail and 5 Star Capital Stops Paying Its 
Investors: 
 

61. The vast majority of 5 Star Capital’s “investments” in the “green product” 

companies operated by Toth and Foraker failed almost as soon as they were made; the rest 

have not generated any return to date. Of the $1.15 million that 5 Star Commercial and 5 

Star Capital transferred/invested, most of the funds were in the form of “loans” that were 

supposed to generate monthly interest payments.  Between March 2015 and July 2015, 

those payments were only $3,500 per month, and then the payments stopped entirely. All of 

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those loans are now in default. Even when payments were being made, the investments 

never generated income sufficient to meet 5 Star Capital’s interest obligations after March 

2015. 

62. As alleged in paragraphs 57 through 58 above, certain of 5 Star Capital’s 

investments were not memorialized and the terms governing those investments are 

unknown. In addition, the undocumented investments have never generated any revenue. 

63. In July 2015, in the wake of the failure of 5 Star Commercial and 5 Star 

Capital’s purported investments with Toth and Foraker, 5 Star Capital stopped making 

interest payments that were required under the terms of the investors’ promissory notes. 

Miller Invokes the Fifth Amendment in Response to Questions Posed by the SEC: 

64. On September 21, 2015, as part of its investigation into the securities law 

violations identified in this Complaint, the SEC issued an investigative subpoena to Miller 

requiring him to appear and provide testimony under oath to the SEC regarding the funds 

he raised from investors for, among other entities, 5 Star Capital and 5 Star Commercial. 

65. On October 23, 2015, rather than appear for testimony, Miller submitted a 

declaration to the SEC, confirming that he was asserting his Fifth Amendment right against 

self-incrimination and that, on that basis, he would refuse to answer any of the SEC’s 

questions regarding, among other topics: (a) 5 Star Capital; (b) 5 Star Commercial; (c) any 

representations Defendants made to investors and prospective investors; (d) Miller’s 

awareness of any fraudulent scheme related to 5 Star Capital and 5 Star Commercial; (e) 

Miller’s role in the creation of the PPMs, (f) Miller’s receipt, misappropriation or misuse of 

investor assets, (g) his financial condition, (h) any underlying transactions he effected on 

behalf of his entities, and (i) his relationships with – and communications with – investors.   

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COUNT I 
Violations of Section 10(b) of the Exchange Act, 

and Exchange Act Rule 10b-5 
(Against Miller, 5 Star Capital, and 5 Star Commercial) 

66. Paragraphs 1 through 65 are realleged and incorporated by reference. 

67. As more fully described in paragraphs 21 through 63, Defendants Miller, 5 

Star Capital and 5 Star Commercial, in connection with the purchase and sale of securities, 

by the use of the means and instrumentalities of interstate commerce and by the use of the 

mails, directly and indirectly: used and employed devices, schemes and artifices to defraud; 

made untrue statements of material fact and 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; and engaged in acts, practices and courses of business which 

operated or would have operated as a fraud and deceit upon purchasers and prospective 

purchasers  of securities. 

68. As described in more detail in paragraphs 43 through 60 above Defendants 

acted with scienter in that they knowingly or recklessly made the material 

misrepresentations and omissions and engaged in the fraudulent scheme identified above. 

69. By reason of the foregoing, Defendants Miller, 5 Star Capital and 5 Star 

Commercial violated Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5 

thereunder [17 C.F.R. 240.10b-5].  

COUNT II 
Violations of Section 17(a)(1) of the Securities Act 

(Against Miller, 5 Star Capital, and 5 Star Commercial) 

70. Paragraphs 1 through 65 are realleged and incorporated by reference as 

though fully set forth herein. 

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71. By engaging in the conduct described in paragraphs 21 through 63 above, 

Defendants Miller, 5 Star Capital and 5 Star Commercial in the offer and sale of securities, 

by the use of the means and instruments of interstate commerce, directly or indirectly, 

employed devices, schemes and artifices to defraud. 

72. Defendants Miller, 5 Star Capital and 5 Star Commercial intentionally or 

recklessly engaged in the devices, schemes, artifices, transactions, acts, practices and courses 

of business described above.  

73. By reason of the foregoing, Defendants Miller, 5 Star Capital and 5 Star 

Commercial violated Section 17(a)(1) of the Securities Act [15 U.S.C. § 77q(a)(1)]. 

COUNT III 
Violations of Sections 17(a)(2) and (3) of the Securities Act 

(Against Miller, 5 Star Capital, and 5 Star Commercial) 

74. Paragraphs 1  through 65 are realleged and incorporated by reference as 

though fully set forth herein. 

75. By engaging in the conduct described in paragraphs 21 through 63 above, 

Defendants Miller, 5 Star Capital and 5 Star Commercial, in the offer and sale of securities, 

by the use of the means and instruments of transportation or communication in interstate 

commerce or by use of the mails, directly or indirectly, have: 

a. obtained money or property by means of untrue statements of material 
fact or by omitting to state material facts necessary in order to make 
the statements made, in light of the circumstances under which they 
were made, not misleading; and  

b. engaged in transactions, practices, or courses of business that operated 
or would operate as a fraud or deceit upon the purchasers of such 
securities. 

76. Defendants Miller, 5 Star Capital and 5 Star Commercial made the untrue 

statements and omissions of material fact and engaged in the devices, schemes, artifices, 

transactions, acts, practices and courses of business described above. 

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77. By reason of the foregoing, Defendants Miller, 5 Star Capital and 5 Star 

Commercial have violated Sections 17(a)(2) and (3) of the Securities Act [15 U.S.C. § 

77q(a)(2)-(3)]. 

RELIEF REQUESTED 

 WHEREFORE, the Commission respectfully requests that this Court: 

I.  

 Issue findings of fact and conclusions of law that defendants committed the 

violations charged and alleged herein. 

II.  

 Enter an Order of Permanent Injunction restraining and enjoining Defendants 

Miller, 5 Star Capital and 5 Star Commercial, their officers, agents, servants, employees, 

attorneys and those persons in active concert or participation with defendants who receive 

actual notice of the Order, by personal service or otherwise, and each of them from, directly 

or indirectly, engaging in the transactions, acts, practices or courses of business described 

above, or in conduct of similar purport and object, in violation of Section 17(a) of the 

Securities Act [15 U.S.C. §§ 77q(a)], and Section 10(b) of the Exchange Act [15 U.S.C. § 

78j] and Rule 10b-5 [17 CFR § 240.10b-5] thereunder. 

III. 

Issue an Order requiring Defendants Miller, 5 Star Capital and 5 Star Commercial to 

disgorge the ill-gotten gains received as a result of the violations alleged in this Complaint, 

including prejudgment interest. 

IV. 

With regard to the Defendants’ violative acts, practices and courses of business set 

USDC IN/ND case 3:15-cv-00519-JD-CAN   document 1   filed 11/05/15   page 18 of 19



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forth herein, issue an Order imposing upon defendants appropriate civil penalties pursuant 

to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)], and Section 21(d)(3) of the 

Exchange Act [15 U.S.C. § 78u(d)(3)]. 

V. 

 Retain jurisdiction of this action in accordance with the principals of equity and the 

Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders 

and decrees that may be entered or to entertain any suitable application or motion for 

additional relief within the jurisdiction of this Court. 

VI. 

 Grant such other relief as this Court deems appropriate. 
 

JURY DEMAND 
 

 Pursuant to Rule 38 of the Federal Rules of Civil Procedure, the Commission hereby 

requests a trial by jury.  

     UNITED STATES SECURITIES 
     AND EXCHANGE COMMISSION 
 

/s/Amy S. Cotter ______   
 Timothy S. Leiman ([email protected])   
 Amy S. Cotter  ([email protected])  

Jaclyn J. Janssen  ([email protected]) 
     SECURITIES AND EXCHANGE COMMISSION 
     175 West Jackson Blvd., Suite 900 
     Chicago, IL  60604 
     (312) 353-7390 
     (312) 353-7398 (fax) 

 
Attorneys for Plaintiff 

 

USDC IN/ND case 3:15-cv-00519-JD-CAN   document 1   filed 11/05/15   page 19 of 19