SEC Action: Silverleaf Financial and Dwight Shane Baldwin Charged
On June 25, 2015, the Securities and Exchange Commission (SEC) filed a civil injunctive action against Silverleaf Financial, LLC and its sole principal Dwight Shane Baldwin in connection with an alleged fraudulent offering. The SEC action alleges that from at least June 2010 through late 2011, Baldwin and Silverleaf offered and sold off promissory notes and investment contracts, raising at least $8 million from 3 investors introduced to him by friends, acquaintances and family members.
According to the SEC action, Baldwin and Silverleaf have been in the business of purchasing defaulted commercial real estate notes at a discount from banks since at least mid-2010. Baldwin and Silverleaf lacked the funds to pay the full purchase price of the defaulted loans, and as such, raised funds from investors in order to purchase the loans. Baldwin typically created a single purpose entity, managed by Silverleaf, and either offered investors membership units in this entity or sold promissory notes to investors. The investment was structured to provide for returns as high as a ten percent within thirty days.
In connection with the offering, the SEC alleges Baldwin and Silverleaf made untrue statements of material fact, omitted important information and engaged in securities fraud. Among the untrue statements was that the principal had minimal or no risk of loss.
According to the SEC action, funds were used to purchase two defaulted loans. One was collateralized by a property in Oviedo, Florida and the other by a property at theTrailhead Lodge in Steamboat Springs, Colorado. Regarding the Oviedo loan, Baldwin made false statements and omissions about the central purpose of the investment. Even though Baldwin sold the Oviedo loan on July 8, 2010, he continued to raise funds for the purported purchase of this loan through July 20, 2010. According to the SEC allegations, regarding the Trailhead Lodge loan, Baldwin made false statements to investors that he had secured a buyer for the loan when in fact the purported buyer had advised Baldwin that it would not buy the note.
The SEC action alleges that Silverleaf and Baldwin violated Section 17(a) of the Securities Act of 1933 (“Securities Act”); Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder. The SEC action seeks permanent injunctions against future violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
For further information, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real South, Suite 202 North, Boca Raton, FL, (561) 416-8956, or by email at [email protected]. This securities law Q & A is provided as a general or informational service to clients and friends of Hamilton & Associates Law Group, P.A. and should not be construed as, and does not constitute legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that prior results discussed herein do not guarantee similar outcomes.
Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Going Public Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855