In federal court in Sherman, TX, the US Securities and Exchange Commission has filed an emergency action to halt a $22.7M mortgage investment scam involving Thurman P. Bryant, III and his Bryant United Capital Funding, Inc. According to the regulator’s complaint, Bryant and his firm raised about $22.7M from about 100 investors by making false promises, including telling them that the investments were free of risk and guaranteed 30% minimum yearly returns.
The SEC claims that Bryant told investors that his firm would fund the mortgages, which would be sold right away to third parties for a fixed fee. He allegedly informed them that their money would be left in secure escrow account as evidence of funds in order to obtain a credit line to cover the mortgage loans. Bryant and his firm are accused of violating the Securities act of 1933’s Section 17(a) and the Securities Exchange Act of 1934’s Section 10(b) and Rule 10b-5 thereunder.
According to the Commission, since the start of this year alone, Bryant has raised about $1.4M from investors. So far, Bryant’s firm has paid about $16.8M as supposed investment return and also as referral fees to investors who’ve helped identify additional prospective investors.
The regulator is contending that the representations that Bryant made to investors were false. Instead, he allegedly commingled investor money in one deposit account while purposely misappropriating $4.8M for personal expenditures, such as luxury car payments, rent, fund, private school tuition, a housekeeper, and other costs. Monthly account statements noting that investors’ initial investments were still in the escrow account were purportedly “false” and “misleading.” Bryant also is accused of funneling about $16.1M to relief defendants Wammel Group and Arthur F. Wammel in Houston for investments in different businesses, as well as in risky securities trades.
Bryant also allegedly sent $1.37M to a concert promoter for not obvious “legitimate or lawful” cause, as well $140K to his dad, Thurman P. Bryant Jr., as supposed investment earning that the SEC says he did not earn.
Ponzi payments were allegedly paid to investors. A district court judge has appointed a receiver to oversee the assets of the defendants.
Meantime, The SEC’s complaint accuses Wammel and his firm of commingling the funds of Bryant’s investors with money raised from Wammel Group’s own investors. They purportedly did this to make distributions to Bryant’s firm, as well as to Wammel Group’s investors and to fund speculative options trades. Investors who entrusted Bryant with their money were never told of the Wammel Group’s involvement. They therefore never approved its participation or any actions that involved their funds.
The Commission contends that Wammel and his firm should have never been given these investors’ money. Meantime, from ’11 through ’16, the options trading receipts of Wammel Group were just about $5.9M, which is a far cry from the 30% returns that Bryant had told investors they would receive.
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The SEC Complaint (PDF)