Source: Securities and Exchange Commission
Lit. Release No. 24991 / December 21, 2020
Securities and Exchange Commission v. Dike Boone Nerren, 4:20-cv-00965 (E.D. Tex. filed December 21, 2020)
The Securities and Exchange Commission today charged Texas-based real estate developer Dike Boone Nerren with fraud in connection with two securities offerings he used to fund a real estate project in McKinney, Texas.
According to the SEC’s complaint, between 2015 and 2017 Nerren raised approximately $1.4 million through Sapient Fund II, LLC and Vintage Place Fund, LP. The complaint alleges that Nerren diverted $450,000 of those funds to an unrelated real estate project he was developing, without disclosure to investors and in contravention of the disclosures in the offering materials. According to the complaint, although Nerren began repaying the diverted funds, the project experienced financial difficulties and Nerren was unable to pay the project’s bills because of the diversion of funds. As alleged, the McKinney project was ultimately foreclosed, resulting in a total loss for the investors.
The SEC’s complaint, filed in federal district court for the Eastern District of Texas, charges Nerren with violating the antifraud provisions of Sections 17(a)(2) and (3) of the Securities Act of 1933. Without admitting or denying the SEC’s allegations, Nerren agreed to be permanently enjoined from violating the charged provisions and to pay a $37,500 civil penalty. The settlement is subject to court approval.
The SEC’s investigation was conducted by Derek Kleinmann and Carol Stumbaugh, and supervised by Barbara L. Gunn and Eric R. Werner of the SEC’s Fort Worth Regional Office. The SEC’s litigation is being conducted by Matthew Gulde, and supervised by B. David Fraser.