SEC Obtains Preliminary Injunctions Against Frack Master and Four Others in Purported House Flipping Scheme

The SEC has obtained court-ordered emergency relief to halt a real-estate scam perpetrated by Christopher A. Faulkner and four others. 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 the alleged real estate scheme, the Court entered an ex parte order granting a temporary restraining order, asset freeze, and other emergency and ancillary relief against Faulkner and Defendants Homes Inc. (Homes), HOMESINC Renaissance, LLC (Renaissance), Matthew Rapoport, and Earl Nelson Davenport, and an agreed preliminary injunction against Faulkner, Rapoport, and Davenport, and a preliminary injunction against Homes and Renaissance. 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 September 11, 2017, Faulkner orchestrated a scheme involving Rapoport, Davenport, and others, to deceive and mislead investors about Faulkner's latest venture, Homes, by falsely 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 re-sale of residential real estate in Southern California; and
• Consistently produced double-digit returns to its investors.

The SEC's investigation into the alleged real estate scheme has been conducted by Kimberly Cain, Scott Mascianica, and John Devine, and supervised by Jim Etri and Jessica B. Magee of the Fort Worth Regional Office. The SEC’s litigation is led by B. David Fraser and Timothy McCole.

More information is available here.