SEC Sues "Queen of Mobile Homes" (Self-Proclaimed) for Fraudulent Investment Scheme

Plus the SEC mourns the passing of Harvey Pitt.

Author

Bruce Carton
June 01, 2023

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SEC Charges Self-Proclaimed ‘Queen of Mobile Homes’ and Three Salespeople with Fraud in Mobile Home Investment Scheme

The Securities and Exchange Commission filed today a complaint in the U.S. District Court for the Western District of Texas charging Outstanding Real Estate Solutions, Inc. (ORES), its Chief Executive Officer and founder Chimene Van Gundy, and salespeople Michael Trofimoff, Santos Kidd, and Maria Tosta for their roles in raising approximately $18.5 million from at least 600 investors through a fraudulent mobile home investment scheme.

According to the SEC’s complaint, between at least June 2018 and November 2021, Van Gundy, the self-proclaimed “Queen of Mobile Homes,” and her company, ORES, raised millions from investors while promising to use the funds to purchase, refurbish, and resell mobile homes. The complaint alleges that Van Gundy and ORES did not actually own hundreds of mobile homes that they claimed ORES purchased with investor funds. Rather than using investor funds as promised, the complaint alleges that Van Gundy and ORES made Ponzi-like payments to existing investors, paid undisclosed sales commissions, and funded Van Gundy’s personal expenses. The complaint also alleges that Van Gundy, Trofimoff, Kidd, and Tosta acted as unregistered brokers, and made false and misleading statements or omissions to investors while offering and selling ORES mobile home investments.

by SEC Press Release

👉 The SEC’s complaint is here.

Commission Statement on the Passing of Former Chairman Harvey Pitt

We mourn the passing of Harvey Pitt, the 26th Chairman of the Securities and Exchange Commission. Harvey loved this agency, dating back to his time right out of law school serving as a staff attorney in the Office of General Counsel (OGC). He continued to serve the Commission for a decade, advising former Commissioner Francis M. Wheat, taking on important roles in OGC and the Division of Market Regulation, and serving in the front office of former Chairman Ray Garrett, Jr. After only seven years at the SEC, Harvey became the youngest General Counsel in the SEC’s history. It was one of his greatest dreams to come back later in his career to chair the agency. As Chair, he oversaw the SEC’s response to the September 11th attacks and led the Commission’s rulemaking efforts in response to the corporate accounting crises of the 1990s. Even in the last year, he has made himself available to offer advice and continued to submit comment letters on our rulemaking proposals. Our hearts go out to Saree and Harvey’s family.

by SEC Statement

👉 Here is the text of Harvey Pitt’s introduction when he was named one of the eight inaugural members of Securities Docket’s “Enforcement Hall of Fame” in 2014:

“Harvey Pitt is a great example of how a gifted staff member can rise through the ranks of the SEC and one day become Chairman. It is extraordinary to imagine that he was the SEC’s General Counsel at age 30 – the youngest GC in the agency’s history. Later, as Chairman, he had was put in the unenviable position of having to lead the agency through one of its most challenging times, taking office just one month prior to 9/11. As many remember, Mr. Pitt was the calm in the storm – showing great leadership and instilling confidence in our markets. Within days of the tragic event, he found his way to New York and provided a steady hand and great leadership when lower Manhattan was still in a fog.”

“But his greatest and longest lasting contribution to the profession may still be the Seaboard report, of which there are great stories of how he would send Steve Cutler drafts at all hours of the night and into the wee hours of the morning.”

“Mr. Pitt has enjoyed several stints in private practice, first turning law firm Fried Frank into a powerhouse SEC defense firm and then, after his time as Chairman, starting his own firm, Kalorama Partners, to provide a full range of strategic services to its clients.”

Evolution of a Disclaimer: The SEC Revisits Its Approach

The one unusual thing about the standard disclaimer is that it stayed the same for as long as I can remember. In the almost three decades that I have been practicing, SEC speakers have been saying pretty much the same disclaimer: “The views I express today are my own and do not necessarily reflect the views of the Commission, the Commissioners or the Staff.” Even when I was engaged in the rote recitation of this disclaimer, it always struck me as odd that, as a representative of the SEC at the program, I was saying that I only expressed my own views, even though obviously the views I discussed on the panel were very much aligned with SEC policy at the time. Perhaps the disclaimer made more sense for the Commissioners, who in their speeches often express political or ideological views that are not necessarily aligned with the views of the Chairman or the other Commissioners. In any event, the disclaimer was what it was, and I did not dare to alter it out of fear of suffering the unknown consequences.

by TheCorporateCounsel .net Blog

👉 In short, the new disclaimer reads, “my views are my own as Chair of the SEC, and I am not speaking on behalf of my fellow Commissioners or the staff.” David Lynn of TheCorporateCounsel .net writes that “the disclaimer makes more sense, in that the speaker acknowledges that they are speaking in their official capacity and not just expressing their own personal views.”

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Hedge Funds Are Deploying ChatGPT to Handle All the Grunt Work

The latest artificial-intelligence hype is powering a massive surge in the stock market on bets that a new era of innovation is nigh.

Yet for money managers who weaponize computing advances for an investing edge, the era of ChatGPT holds a less lofty promise for now: Automating the grunt work.

So-called generative AI is already helping to speed up mundane tasks known to crush the spirit of junior Wall Street employees, hedge funds say — from reviewing reams of market research to writing basic code and summarizing fund performance.

by Bloomberg

House Representatives Tom Emmer and Darren Soto’s Securities Clarity Act Would Make It Harder for the SEC to Argue Crypto Tokens Are Unregistered Securities

A new bill introduced in the House would clarify that a digital asset that is sold as part of an “investment contract” does not necessarily become a security. If passed, the Securities Clarity Act would help settle one of the most debated legal questions in the crypto space and make it more difficult for the U.S. Securities and Exchange Commission (SEC) to argue that many existing tokens are unregistered securities.

by CoinDesk

Bye-Bye Big Boys? The SEC Turns its Enforcement Focus to Private Deals | King & Spalding

The essence of the SEC and DOJ actions against Javice allege that Frank defrauded a large financial institution in connection with the sale of her company by providing false information regarding its number of users. According to the SEC, Javice engineered a scheme to create a fraudulent data set that misrepresented Frank’s customer base as consisting of 4.25 million students – when the actual number was less than 300,000. The SEC further alleged the number of students was a material data point for the $175 million transaction.

The SEC’s decision to charge a company or an individual with fraud relating to a significant securities transaction is certainly not a noteworthy story. What is noteworthy is that this was a privatetransaction involving two sophisticated parties.

by King & Spalding

Guest Post: What D&O Professionals Need to Know About CBDCs and Stablecoins

In the wake of the introduction of CBDCs in about 5 years from now, D&O-Policyholders may increasingly request alternative (optional) payment methods for both premium payments and claims payments. In times of high inflation asset-backed Stablecoins, such as gold-backed cryptocurrencies, may serve Policyholders better for the purpose of D&O asset protection than CBDCs linked to fiat currencies. The D&O insurance industry should explore both options – CBDCs and asset-backed Stablecoins – for issuing and offering D&O insurance policies, so that Policyholders have a choice. Insurers should monitor the developing regulatory environment for CBDCs and Stablecoins. Finally, the D&O insurance market may soon be ready for a gold-backed D&O Policy. A famous quote from J. P. Morgan reads: “Gold is money. Everything else is credit.”

by The D&O Diary

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