UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

ADMINISTRATIVE PROCEEDINGS RULINGS

Release No. 6879/November 14, 2022

ADMINISTRATIVE PROCEEDING

File No. 3-20801

In the Matter of :

:

DF GROWTH REIT II, LLC : ORDER

The Securities and Exchange Commission instituted this proceeding with an Order 

Temporarily Suspending Exemption Pursuant to Section 3(b) of the Securities Act of 1933 and Rule 

258 of Regulation A1 Thereunder and Notice of Opportunity for Hearing on March 16, 2022. 

Respondent DF Growth REIT II, LLC (Respondent or REIT II), requested a hearing, and, on March 

31, 2022, the Commission ordered that the matter be heard by an Administrative Law Judge (ALJ). 

On May 16, 2022, the proceeding was reassigned to the undersigned. 

Under consideration are the Division of Enforcement’s Motion for Summary Disposition

and responsive pleadings. In accordance with the procedural schedule adopted on May 26, 2022, as 

supplemented on August 1 and September 14, 2022,2the Division filed its motion on June 3, 2022; 

REIT II, an Opposition on June 21, 2022; the Division, a Reply on June 28, 2022; REIT II, an 

Opposition on September 19, 2022; and the Division, a Reply on September 28, 2022.

This proceeding concerns a Regulation A offering statement filed by REIT II on December 

23, 2020, on Securities Act Form 1-A and amended on Form 1-A/A on January 21, 2021. The 

Division seeks a permanent suspension of REIT II’s use of the Regulation A exemption, pursuant to 

Securities Act Section 3(b) and Rule 258(a)(1), (2) thereunder. Specifically, the Division alleges 

that DF Growth REIT II failed to comply with requirements of Regulation A by (1) engaging in a 

delayed offering, in violation of Rule 251(d), and (2) raising its maximum offering amount from 

$50 million to $75 million through filing an offering circular supplement rather than through a new 

offering statement or amendment, in violation of Rule 253(b). It further alleges that Respondent’s 

offering statements and solicitation materials contained untrue or misleading statements of material 

fact relating to (1) the separation of “REIT II” from “REIT I,” DiversyFund’s previously existing 

 

1 Regulation A consists of Securities Act Rules: 17 C.F.R. §§ 230.251-263 (Rules 251-263).

2

See DF Growth REIT II, LLC, Admin. Proc. Rulings Release Nos. 6853, 2022 SEC LEXIS 1355 

(A.L.J. May 26, 2022); 6860, 2022 SEC LEXIS ____ (A.L.J. Aug. 1, 2022); 6869, 2022 SEC 

LEXIS 2375 (A.L.J. Sept. 14, 2022). The proceeding was stayed between August 15 and 

September 14, 2022, based on the parties’ request for a Stay Pending Commission Consideration of 

Offer of Settlement. DF Growth REIT II, LLC, 2022 SEC LEXIS 2375.
2

real estate investment fund, (2) the minimum cash amount needed for its business and the 

significant risk of loss to REIT II investors if REIT II were unable to raise sufficient capital in its 

Regulation A offering, and (3) the fees that investors would be charged. Respondent vigorously 

contests these allegations, and both parties expanded these arguments in their filings on the 

summary disposition motion and provided affidavits and documentary evidence.

While the Division argues that permanent suspension is warranted on the basis of undisputed

facts, it appears that questions of material fact remain as to one or more claims or defenses. For 

example, the evidence provided reveals a dispute of material fact as to when Respondent began 

soliciting investors. Compare Mot. Summ. Disp. Exs. 2 at 1-2, 21 at 75-77, with Ex. 22 at 76.

There is also a material dispute as to whether Respondent signed advisory agreements for its 

investors and invested their funds in REIT II without their knowledge. The Division presented 

evidence in the form of declarations from three investors that they either had not signed advisory 

agreements or had not consented to investing in REIT II. Mot. Summ. Disp. Exs. 25, 26, 27. 

Respondent countered this as to one of the three investors with a declaration of DiversyFund’s Head 

of Product and Technology, who is responsible for its website and investor portal. Decl. of David 

Legacki (filed Jul. 15, 2022). Moreover, the evidence presented is insufficient to support the 

Division’s claims that Respondent misrepresented its minimum capital requirements and the 

relationship between REIT I and REIT II.

Some of the Division’s other allegations appear to be supported by undisputed facts, such as 

its claim that Respondent violated Rule 253(b) by raising its maximum offering amount from $50 

million to $75 million through filing an offering circular supplement rather than through a new 

offering statement or amendment. Mot. Summ. Disp. Ex. 3. That violation alone might permit the 

entry of a permanent suspension, but does not require it. Rule 258(d), referring back to Rule 

258(a)(1), provides that the “Commission may . . . after notice of and opportunity for hearing, . . . 

permanently [suspend] the exemption for any reason [specified for] a temporary suspension under 

[Rule 258(a)]” (emphasis added), which includes when “any of the terms, conditions or 

requirements of Regulation A have not been complied with." The Rule’s use of “may” means that it 

does not require a permanent suspension. Hearing testimony could further clarify the 

circumstances of Respondent’s violation and whether there are any mitigating factors.

The Division’s Motion is DENIED. The parties are ordered to confer on prehearing and 

other procedures for the resolution of the issues in this proceeding and to file a joint proposal by 

December 9, 2022. The hearing has been scheduled to commence on April 17, 2023, consistent 

with 17 C.F.R. § 201.200(c). DF Growth REIT II, LLC, Admin. Proc. Rulings Release No. 6877, 

2022 SEC LEXIS 2911 (A.L.J. Oct. 31, 2022). 

IT IS SO ORDERED. 

/S/ Carol Fox Foelak 

Carol Fox Foelak

Administrative Law Judge