The Securities and Exchange Commission filed an emergency action in a Dallas federal court against Amerifirst Funding, Inc. and Amerifirst Acceptance Corporation alleging fraud.
The SEC contends that the offering of securities, known as Secured Debt Obligations (“SDOs”), are notes purportedly secured by automobile financing receivables created or purchased by the defendants. The district court entered temporary restraining orders suspending the offering, freezing the defendants’ assets and requiring an accounting and repatriation of assets.
The court also appointed a receiver to secure assets for investors, and ordered defendants to preserve documents and submit to expedited discovery. The SEC says the ruling has frozen the assets of the investment firm, which it accused of running a scam that targeted senior citizens, mostly in Texas and Florida, since early 2006.
The complaint says the firm violated securities laws, including representing the investments were virtually risk-free when the fund instead invested in risky high-yield bonds, stocks and options. The firm’s managing director is also accused of spending $4.7 million of investors’ money for personal use, including land, cars, travel and child support.
Other individuals connected with Amerifirst and subsidiaries of the firm were also named in the civil action. An attorney for individuals named said they would vigorously contest the accusations.
SEC v. Amerifirst Funding, Inc., et al. (U.S.D.C., Northern District of Texas, Dallas Division, Civil Action No. 3:07-CV-1188-D)
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