Promoter who promised investors a 20% return on Christian concerts accused of fraud by the SEC

The US Securities and Exchange Commission said in a lawsuit filed Thursday before the US District Court that concert promoter Jeffrey E. Wall and his company, The Lighthouse Events LLC, were instead using certain investor funds for other purposes, such as repayment of debts and previous investors. offers. The complaint says that Wall has also made promises and guarantees to investors that he has not honored.

According to the website of The Lighthouse Events, the company is an active company founded by Wall and his wife, both declared Christians, who have organized more than 700 church concerts since its founding in 2008. The company has organized and promoted concerts for acts such as the Oak Ridge Boys in March of last year and other Christian-themed groups, such as Vertical Workshop and Sanctus Real, which often occur in small churches.

Wall did not respond to a request for comment on Thursday.

The SEC's complaint states that between about January 2014 and October 2018, Wall and Lighthouse raised more than $ 3 million from about 145 investors to promote Christian entertainment events in New England.

According to the complaint, Wall and Lighthouse falsely told potential investors that their money would be used solely to promote and organize concerts and festivals, adding that the repayment of the investment was "guaranteed" and "guaranteed" within a certain time period. from one year.

According to the complaint, a typical mass solicitation email said: "Become a financial partner of our summer festivals. Help us spread the message of Christ and earn 20% of your investment. To learn more, send an email to Jeff Wall … "

However, Wall has used some investor funds for other expenses, including the payment of existing Lighthouse debt and payments to previous investors using the money from subsequent investors, the complaint says. Wall and Lighthouse also failed to disclose to potential investors information about Lighthouse's deteriorating financial situation as a result of lower ticket sales and the increasing indebtedness of its short-term borrowings, the complaint said.

Wall and Lighthouse did not repay about $ 1.6 million of funds it had fraudulently collected from investors, the SEC said.

The complaint alleges that Wall and Lighthouse violated the anti-fraud provisions of the Securities Act of 1933. The SEC claims permanent injunctions, civil sanctions and restitution plus interest on Wall and Lighthouse.

The Business Ethics Office website lists five complaints against Lighthouse, emanating from investors who claim that the company has not been able to repay them with the promised interest.

"I have invested more than $ 51,000 with a 20% guaranteed return, paid monthly at $ 5,140, ​​as of … December 1, 2017 (until November 1, 2018)," states a complaint. "Lighthouse Events has not kept its commitment. To date, we have only received $ 35,000 and we still owe more than $ 25,000. "

The company responded on the office website.

"The flagship events agree that we owe this money to (redacted). We have repaid 60% of the partnership and are working hard to get the balance back, "he writes. "Ticket sales were interrupted in the past year, making it difficult to repay the balance of the partnership. We are a Christian ministry and we have not tried to deceive anyone. We simply struggled with ticket sales, making it difficult to stay up to date. "

In the SEC's 14-page complaint to the court, regulators blame Wall and its company for "affinity fraud," which refers to investment-related scams that attack identifiable groups such as than religious or ethnic communities.

The complaint cites an e-mail sent to a potential investor stating that the repayment of the investment was guaranteed, regardless of the financial performance of the company.

"We need investors to help us pay deposits for our summer festivals. This is going to be our biggest year of ministry and (we) need new investors, "said the complaint to Wall's e-mail. "The loan is guaranteed, whether we win money or not at the festival. Investors are the backbone of our department. Without financial partners, we could not make more bookings of artists, so please know how much we appreciate our team of investors. To date, all of our investors have been reimbursed 100% of the money invested. "

According to the complaint, Wall and Lighthouse made no effort to sequester and track investors' contributions to ensure that the funds were used solely for the purpose promised to investors.

SHAKY FINANCE

From the beginning, Wall used mainly a single bank account to deposit all Lighthouse revenues and pay all expenses, he adds. According to the complaint, Lighthouse is a financially unstable company whose decisions were made by short-term lenders.

"While the profitability of Lighthouse's concerts and festivals was decreasing and its borrowing from cash advance companies was increasing, investor funds were also used to pay for daily remittances and court judgments. cash advance companies, as well as payments to former investors. Promissory notes, "says the complaint.

Christopher Branson, a partner at the Portland Pleasant law firm Murray Plumb & Murray, who is not involved in the case, said it was not uncommon for a legitimate company to violate securities laws while she desperately needed cash.

Branson, chairman of the firm's business and corporate law group, said it was often the excessive promises made by a troubled company to secure investment leading to future legal violations.

"It's a fair law, and if you make promises to invest, you'd better prepare to stick to them," he said. "It's not a defense that you were stressed and that you were desperately looking for money."

According to the Lighthouse website, the company was founded in October 2008 by Wall and his wife, Gail, both from California and fervent Christians. Jeffrey Wall is a seasoned producer of Christian radio programs and the couple decided to launch his concert promotion business after moving to Maine in 2007.

"After much prayer and searching, Gail had the idea of ​​a Christian concert ministry. She encouraged me to start The Lighthouse Events, after all, it had been 20 years since I knew Christian music, "wrote Jeffrey Wall. "It is at this time that Romans 8:28 was born for me. He says, "And we know that God makes everything work for the good of those who love God and are called according to His purpose for them."

J. Craig Anderson can be reached at 791-6390 or at:

[email protected]

Twitter: jcraiganderson

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