Christopher Faulkner, the self-proclaimed "Frack Master" who was accused by the Securities and Exchange Commission of running an $80 million oil-and-gas scheme, has had his assets frozen in what the SEC says is a real estate scam he perpetrated with four others.
To halt the scam, the SEC obtained court-ordered emergency relief in the form of a temporary restraining order, asset freeze, and other emergency and ancillary relief against Faulkner and defendants Homes Inc., HOMESINC Renaissance LLC, Matthew Rapoport and Earl Nelson Davenport.
The court has entered preliminary injunctions against all five defendants. 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 Sept. 11, Faulkner orchestrated a scheme to deceive and mislead investors about his latest venture, Homes Inc., 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 resale 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 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 seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against the defendants.
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 this oil-and-gas fraud case, the court 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 on Sept. 25.
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