U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23451 / January 21, 2016
Securities and Exchange Commission v. Marquis Properties, LLC, Civil Action No. 2:16-cv-00040 (D. Utah)
SEC Charges Utah Real Estate Investment Company and Its Principals With Operating a Ponzi Scheme and Obtains Order Freezing Assets
The Securities and Exchange Commission obtained an asset freeze and other ancillary relief against Marquis Properties, LLC, and its CEO/President Chad R. Deucher for orchestrating a $28 million Ponzi scheme that defrauded more than 250 investors throughout the United States. The complaint also names Marquis’ Executive Vice President, Richard (“Rick”) Clatfelter as a defendant.
According to the SEC’s complaint, filed on January 19, 2016 in federal court in Utah:
- From March 2010, Marquis, through Deucher and Clatfelter, orchestrated a scheme to defraud unwitting investors by inducing them to invest in notes and investment contracts collateralized by real estate.
- Marquis represented that it would use investor funds to purchase real properties and that investors would receive guaranteed profits and return of principal upon sale of the properties. Marquis represented that investments were safe and low risk because the notes and investment contracts were 100% collateralized by valuable real property.
- Marquis failed to purchase properties with investor funds, however, and properties offered as collateral were often not owned by Marquis, were substantially encumbered, or were in uninhabitable or blighted condition.
- Rather than using investor funds as represented, Marquis used investor funds to pay returns to earlier investors, in a classic Ponzi scheme. Marquis could not have paid returns to earlier investors without the influx of new investor money.
- Deucher caused Marquis to use investor funds to pay personal expenses of Deucher and directed Marquis to provide investor funds to his wife.
The SEC’s complaint charges Marquis, Deucher, and Clatfelter with violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”). The complaint also charges Deucher and Clatfelter with violation of Section 15(a) of the Exchange Act, and names Jessica Deucher as a relief defendant. The SEC is seeking injunctive relief, disgorgement, prejudgement interest, and civil money penalties from Marquis, Deucher, and Clatfelter.
The SEC’s investigation has been conducted by Scott Frost and Cheryl Mori and supervised by Richard Best. The litigation will be led by Amy Oliver.
http://www.sec.gov/litigation/litreleases/2016/lr23451.htm
