Secured Income Group and Owner Charged with $100 Million Offering Fraud 

SEC Charges Secured Income Group, Real Estate Investment Firm, with Fraud Involving its Secured Debentures 

According to a press announcement on September 15, 2022, the Securities and Exchange Commission has reportedly charged Secured Income Group, Inc, based in Orange County, CA, and its owner and president, and its investor relations representative, with a fraudulent offering. The defendants purportedly raised approximately $100 million from hundreds of investors for Secured Income Group’s “Secured Debentures” offering between July 2017 and January 2021. 

The SEC’s complaint alleges that the company, led by its owner, promised investors that it would pool their money to make real estate loans secured by first lien positions on the underlying properties and that their investments would be secured by this real estate.  

According to the SEC’s complaint, Secured Income Group and its owner allegedly misrepresented material aspects of the investment when it reportedly failed to follow its business plan. The SEC alleges that though the company did originate real estate loans, it also purportedly sold off tens of millions of dollars of its loans along with the corresponding security interests.  

Consequently, the outstanding principal value of the company’s real estate loan collateral is allegedly substantially less than what it owed to its investors. 

Secured debentures are typically secured by a charge on the fixed assets of the issuer company. When the issuer company fails to make a payment of either the principal or interest amount, the assets of the company can be sold to repay the liability to the investors. 

The complaint reportedly charges Secured Income Group and its owner with violating the securities registration requirements and also reportedly charges the owner as a control person under Section 20(a) of the Exchange Act for SIG’s violations of that Act. The complaint reportedly also charges the investor relations representative with violating the securities registration requirement of the Securities Act and the broker-dealer registration requirement of the Exchange Act. 

The SEC purportedly seeks permanent injunctions, disgorgement, prejudgment interest, and civil penalties against all defendants, and also an officer and director bar against the owner. 

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