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SEC Charges Unregistered Brokers Who Sold Allegedly Fraudulent Securities

The SEC claims Ronald Frank Stevenson and Jason P. Wootten unlawfully sold securities in EquiAlt, which has been accused of operating a $170 million Ponzi scheme.

The Securities and Exchange Commission charged two Arizona-based unregistered brokers for selling a combined $50 million in real estate funds managed by Florida-based EquiAlt, which was charged in February 2020 for running a Ponzi-like scheme.

According to the SEC complaint filed in an Arizona federal court, Ronald Frank Stevenson and his company, American Financial Security, raised about $19 million for the unregistered offer from more than 100 investors, resulting in about $1.9 million in commissions. Jason P. Wootten and his company, Family Tree Estate Planning, sold $32 million of the alleged fraudulent investments, leading to $3.7 million in commissions. Neither of their companies was registered as a broker/dealer. 

Stevenson and Wootten did not return requests for comment by press time.

EquiAlt purported to use investors’ funds to make real estate purchases in “distressed markets” throughout the country, promising investors interest rates of 8% to 10% annually.

But these deals were unprofitable “almost from inception,” and the company soon began using new investor money to pay the interest for current investors, according to the SEC. The commission filed an emergency freeze in February 2020, with a court granting a temporary restraining order and asset freeze. Many investors were elderly or retired, and were attracted by the funds on the assumption that they were “safe, low risk and conservative.” 

The SEC’s 2020 action against CEO Brian Davison and Managing Director Barry Rybicki claims they raised more than $170 million from about 1,100 investors throughout 35 states.

To run the scheme, EquiAlt used a network of unregistered brokers, including Wootten and Stevenson. Wootten met Rybicki in 2016, according to the complaint, and agreed to sell EquiAlt securities for an 8% commission. He began recommending the funds to Family Tree’s clients, including many who had initially contacted the company about helping to prepare a living trust.

“Many of these investors were unaccredited, unsophisticated, and elderly people who invested through their IRA accounts,” the SEC complaint said.

Stevenson solicited clients for EquiAlt funds for more than five years, continuing to reassure investors about the fund’s risk and about the EquiAlt model, according to the complaint. To attract investors, he would place ads in local newspapers and provide investors with marketing materials.

Investors previously filed a class action lawsuit against EquiAlt, after the SEC’s enforcement action against the company in February of last year, and the suit grew to include an attorney and several Florida-based law firms investors believed had helped perpetuate the Ponzi-like scheme. The SEC is seeking disgorgement with interest from Wootten and Stevenson, as well as financial penalties.

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