Chad Deucher and Richard Clatfelter

Date:

February 2, 2016

Type of alert:

Ponzi Scheme  

The SEC recently filed a Complaint in an effort to recover money in an alleged Ponzi scheme. In the Complaint, the SEC asserts the Ponzi scheme was operated by Chad Deucher and Richard Clatfelter through Marquis Properties, LLC, an entity they control that is headquartered in Orem, Utah. According to the Complaint, since at least March 2010, Deucher and Clatfelter have raised approximately $28 million from over 250 investors in Marquis. In the course of offering the investments, Deucher and Clatfelter allegedly made the following representations to investors:

  • That Marquis offers investments in turnkey real estate properties, promissory notes secured by real properties, and joint venture agreements to purchase real properties.
  • That Marquis locates, purchases, renovates, and sells single-family and small multi-family homes in lucrative areas of the country.
  • That Marquis has proven renovation crews, property managers, and realtors on the ground to assist with all stages of the project, eliminating the need for direct involvement.
  • That investors will receive guaranteed return of principal and returns on their investment in the form of rental income, interest payments, and/or profits from the sale of properties.
  • That investments with Marquis are safe, low-risk, or risk-free because investment proceeds will be secured by a first deed of trust on property wholly owned by Marquis, and that investments will be “over-collateralized.”

According to the SEC Complaint, Deucher and Clatfelter omitted to disclose to investors, however, that the properties Marquis offers as collateral are not owned by Marquis, are substantially encumbered, and/or are in uninhabitable or blighted condition; that Marquis itself is insolvent and unable to make investor interest and principal payments according to terms of agreements; and that investor returns are being paid from the funds of new investors. Because investors are being repaid from new investor funds, the SEC asserts that the Marquis operation is a classic Ponzi scheme. The SEC seeks restitution, civil monetary penalties, and other sanctions against Deucher, Clatfelter, and Marquis for their alleged involvement in the Ponzi scheme.

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