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# Other

# SEC v. Dike Boone Nerren Case No. 4:20-CV-965-ALM (E.D. Tex.)

                            Jan. 5, 2023                       

On December 21, 2020, the Commission filed a complaint (“Complaint”) against Dike Boone Nerren (“Nerren” or “Defendant”). The Complaint alleged that from November 2015 through May 2017, the Defendant violated federal securities laws by raising approximately $1.4 million through Sapient Fund II, LLC and Vintage Place Fund, LP, and by misappropriating investor funds that were invested to acquire and develop a single family subdivision for a real estate project in McKinney, Texas. The Complaint alleges that Nerren diverted $450,000 of those funds to an unrelated real estate project he was developing, without disclosure to investors and in contravention of the disclosures in the offering materials. According to the Complaint, although Nerren began repaying the diverted funds, the project experienced financial difficulties and Nerren was unable to pay the project’s bills because of the diversion of funds (the “McKinney Project”). The McKinney Project was ultimately foreclosed, resulting in a total loss for the investors. See the Commission’s Complaint.

The Defendant was ordered to pay a $37,500.00 civil penalty to the Commission. The Commission was ordered to hold all funds, together with interest and income earned thereon pending further order of the Court. See Final Judgment as to Defendant Dike Boone Nerren. 

On February 14, 2022, the Court established a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002 (“Fair Fund”), so the penalty collected could be distributed to those harmed by the Defendant’s conduct described in the Complaint. The Court also appointed Miller Kaplan Arase LLP as the Tax Administrator to fulfill the tax obligations of the Fair Fund, and appointed Allison Moon, a Commission employee, as the Distribution Agent to oversee the administration and distribution of the Fair Fund to harmed investors. See the Court’s Order.

The Fair Fund consists of $37,500.00 paid by the Defendant. 

On October 28, 2022, the Commission filed a motion to approve a distribution plan, together with a Distribution Plan appended to a Proposed Order (“Distribution Plan”). See the Commission’s Motion.

On November 9, 2022, the Court entered an order that approved the Distribution Plan. See the Court’s Order and the approved Distribution Plan.

The Distribution Plan provides that the distribution of the Fair Fund shall be made to investors who were harmed by the Defendant’s conduct with respect to the McKinney Project, as alleged in the Complaint. Based on information obtained by the Commission during its investigation and the review and analysis of applicable records, the Commission has reasonably concluded that it has all records necessary to calculate each investor’s harm. As a result, the Fair Fund is not being distributed according to a claims-made process.

For more information, please contact the Distribution Agent:

Allison MoonOffice of DistributionsTelephone Number: 202-551-3015Email: moona@sec.gov

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