Colorado Securities Commissioner issues cease and desist order for offering unregistered securities related to Berkeley neighborhood real estate investment
DENVER (Sept. 23, 2015) – On Wednesday, September 23, the Colorado Division of Securities, part of the Department of Regulatory Agencies (DORA), issued a cease and desist order for the solicitation of unregistered securities in Colorado. Respondents to this order include Tennyson Place LLC and Allante Properties LLC, as well as managing members Daren and Darrell Schmidt.
The Division of Securities initiated an investigation into the two real estate companies in July, following a complaint. The investigation revealed that as early as May of 2015 ads were posted in the Denver Post offering membership interests in Tennyson Place for a minimum investment of $100,000. The solicitations stated that investments would go toward the development of an apartment in Denver’s Berkeley neighborhood at 39th and Tennyson Street, and touted an annualized return of 17.2 percent by year six of the investment. The area has seen a recent revitalization with many new businesses and residences. Upon inquiry, a representative for the LLCs stated that the offerings were being made relying on a rule 506(c) exemption, however, a review of the Colorado securities filings revealed that no registration, nor any exemption from registration, including the required filing of a Form D for private securities, had been filed for the Tennyson offering. Securities had also been sold to non-accredited investors, which negates the Rule 506(c) exemption.
Securities Commissioner Gerald Rome stated of the order: "Mr.’s Schmidt were required to file a proper exemption filing prior to engaging in the offer or sale of these private securities. Even assuming that everything about the project was conducted on the upand-up, the reason these rules are in place is so that we can track potential missteps that would harm investors. Regardless of how much real estate development appears to be taking off in a particular area, by skirting these regulations the respondents placed their investors at increased risk, and therefore need to cease their solicitations and sales of securities in violation of the Colorado Securities Act .”
Daren and Darrell Schmidt have agreed to the order not to violate the Colorado Securities Act in the future through the solicitation of unregistered, non-exempt securities.
Division of Securities