The Securities and Exchange Commission (SEC) has announced a “bifurcated” judgment against an issuer 420 Real Estate LLC and its CEO Willard Jackson, parties that raised money on an investment crowdfunding platform.
As was reported last fall, the SEC had filed fraud charges against TruCrowd and three issuers in allegations of fraud regarding $2 million of unregistered securities apparently offered via two investment crowdfunding offerings.
Today, the SEC has revealed that in the case SEC v. Shumake, et al, final judgments have been obtained in regards to 420 Real Estate and Jackson.
The SEC alleged that Shumake, along with Jackson, had conducted a fraudulent and unregistered crowdfunding offering through 420 Real Estate, a hemp company, on TruCrowd, Inc., a registered crowdfunding portal. The complaint also alleged that Shumake and Jackson raised $888,180 from retail investors through 420 Real Estate.
According to the complaint, Shumake, with assistance from Jackson, hid his involvement in the offering from the public out of concern that his prior criminal conviction could deter prospective investors. In addition, Shumake and Jackson allegedly diverted investor funds for personal use rather than using the funds for the purposes disclosed to investors.
Without admitting or denying the allegations of the complaint, Jackson and 420 Real Estate consented to the entry of bifurcated judgments permanently enjoining them from violating the registration provisions of Section 5 of the Securities Act of 1933 and the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Jackson also consented to the entry of an officer and director bar. The Court will determine monetary relief at a later date.
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