SEC Charges Real Estate Investment Entity and Principals with Securities Fraud and Registration Violations
Litigation Release No. 25097 / May 25, 2021
Securities and Exchange Commission v. The Legacy Group, Inc. et al., No. 21-cv-01404 (D. Colo. filed May 24, 2021)
On May 24, 2021, the Securities and Exchange Commission charged Colorado and Florida residents Randy R. King, Matthew B. King, and Andrea S. Trout and three entities they operated, The Legacy Group, Inc., Colorado Ventures I, LLC, and Radiant Holdings, LLC, with fraudulently offering and selling approximately $29 million in unregistered securities to more than 200 investors.
According to the SEC's complaint, filed in federal court in Colorado, the defendants raised money to fund residential and small-scale commercial real estate projects, primarily in California and Colorado. Legacy, the Kings, and Trout allegedly defrauded investors by raising money for specific projects and then using the funds on other projects. They also allegedly materially misstated the risks of certain investments, including by misrepresenting the amount of investments already associated with the project. The SEC's complaint also alleges that the Kings, with respect to Colorado Ventures and Radiant, defrauded investors by misusing certain investor funds, which were earmarked for specific projects, but used instead on other projects and/or redirected to the Kings, personally.
The SEC's complaint charges the Kings, Legacy, Colorado Ventures, and Radiant with 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; charges Trout with violating the antifraud provisions of Section 17(a)(3) of the Securities Act; and charges the Kings, Trout, and Legacy with violating the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act. The defendants, without admitting or denying the allegations of the complaint, have consented to judgments enjoining them from violating the charged provisions of the securities laws, imposing conduct-based injunctions, and ordering Randy King to pay $174,318 in disgorgement, $6,056 in prejudgment interest, and a civil penalty of 195,000; Matthew King to pay disgorgement of $89,438 plus $9,097 in prejudgment interest, and a civil penalty of $150,000; Trout to pay $23,509 in disgorgement, $1,637 in prejudgment interest, and a civil penalty of $125,000; and Legacy to pay $416,859 in disgorgement and $85,867 in prejudgment interest.
The SEC's investigation was conducted by Emily Renwick Garnett, Daniel Konosky, and Helena Engelhart, and supervised by Kurt L. Gottschall, Jason J. Burt, and Danielle R. Voorhees of the Denver Regional Office. The SEC's litigation will be led by Polly A. Atkinson and Christopher Martin and supervised by Gregory A. Kasper. The SEC appreciates the assistance of the Colorado Division of Securities.