U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19408 / September 29, 2005
SECURITIES AND EXCHANGE COMMISSION v. NJ AFFORDABLE HOMES CORP. AND WAYNE PUFF, Civil Action No. 2:05-CV-04403 (JLL) (D.N.J.)
SEC OBTAINS PRELIMINARY INJUNCTIVE RELIEF ON CONSENT AGAINST NJ AFFORDABLE HOMES AND WAYNE PUFF TO HALT ONGOING FRAUDULENT OFFERINGS OF SECURITIES
The Securities and Exchange Commission announced today that its motion for a Preliminary Injunction and other relief was granted on consent in its enforcement action to halt fraudulent unregistered offerings of securities and an ongoing Ponzi scheme orchestrated by NJ Affordable Homes Corp. (NJ Affordable) and its owner and president, Wayne Puff (Puff) (collectively, the "Defendants").
The Commission's Complaint alleges that from at least 1999 to the present, NJ Affordable and Puff have sold, in unregistered offerings, at least $40 million in notes to more than 490 investors located throughout the United States. In selling the notes, the Defendants made, and continue to make, materially misleading misrepresentations and omissions concerning investment risk and the nature of NJ Affordable's business. The Commission alleges that NJ Affordable and Puff guaranteed investors high rates of return, between 15% and 20%, based on promises that NJ Affordable and Puff would use the investors' money to fund the purchase, renovation, and resale of real property. The Defendants failed to disclose to investors that they could not pay such high rates of return, are funding payments to existing investors by soliciting new investor money, and are generating fictitious revenue by selling their properties to insiders, investors, and affiliated entities. Moreover, the Commission alleges that NJ Affordable and Puff failed to tell investors that the investment is not as secure as promised because NJ Affordable and Puff routinely inflate the value of the property upon which NJ Affordable granted mortgage interests.
The Complaint charges NJ Affordable and Puff with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder and seeks a final judgment ordering NJ Affordable and Puff to disgorge ill-gotten gains, and assessing civil penalties.
The Defendants consented to the entry of an Order which grants preliminary injunctive relief, including (i) maintaining the freeze of all the assets of NJ Affordable and Puff; and (ii) continuing the appointment of a receiver over NJ Affordable. In addition to this relief, the Order preliminarily enjoins NJ Affordable and Puff from committing future violations of the foregoing federal securities laws.