SEC Obtains Final Judgments Against Defendants in Offering Fraud Scheme
Litigation Release No. 24945 / October 14, 2020
Securities and Exchange Commission v. Dana J. Bradley, Marlin S. Hershey, D. Bradley, Inc., Bryant Boys, LLC, Distressed Lending Fund, LLC, Erndit LLC, Hershey Enterprises, Inc., MW Enterprises, LLC, Performance Holdings, Inc., Performance Retire on Rentals, LLC, No: 3:19-cv-00490-FDW-DSC (W.D.N.C.)
On September 25, 2020, the U.S. District Court for the Western District of North Carolina entered partial consent judgments against defendants Dana J. Bradley, Marlin S. Hershey, D. Bradley, Inc., Bryant Boys, LLC, Distressed Lending Fund, LLC, Erdnit LLC, Hershey Enterprises, Inc., MW Enterprises, LLC, Performance Holdings, Inc., and Performance Retire on Rentals, LLC for their involvement in an offering fraud scheme and related unregistered broker activity.
According to the SEC's complaint, filed September 30, 2019, Bradley and Hershey, along with entities under their control, told investors they would use investor funds to make loans to real estate developers who would then use the money to acquire and rehabilitate homes in Charlotte, North Carolina and other areas of the country. The complaint alleged that Bradley and Hershey used a large portion of the funds to pay themselves more than $1 million in commissions and repay principal and interest due to other investors. The complaint further alleged that Bradley and Hershey oversaw three securities offerings for a third-party real estate developer in Florida and, in connection with those offerings, operated as unregistered brokers and received approximately $2.1 million in commissions.
Without admitting or denying the SEC's allegations, Bradley, Hershey, Performance Retire and Distressed Lending Fund consented to the entry of a final judgment enjoining them from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the SEC's allegations, Bradley, Hershey, Bryant Boys, Bradley Inc., Erndit, Hershey Enterprises, MW Enterprises and Performance Holdings consented to the entry of a final judgment enjoining them from violating the broker-dealer registration provisions of Section 15(a) of the Exchange Act. The judgment orders Bradley to pay $19,849 in disgorgement and prejudgment interest and a $192,768 civil penalty and Hershey to pay $19,869 in disgorgement and prejudgment interest and a $192,768 civil penalty for the antifraud violations. The judgment reserves the issue of disgorgement related to the broker-dealer registration violations for further determination by the court upon a motion of the SEC.
The SEC's litigation was led by Paul Kim, Kristin Murnahan, and Mark Eric Harrison of the Atlanta Regional Office.