SEC v. Detroit Memorial Partners, LLC and Mark Morrow, Case No. 1:13-cv-01817 WSD (N.D. Ga.). On June 3, 2013, the SEC announced it charged Detroit Memorial Partners, LLC (“DMP”) and its managing member, Mark Morrow in an offering fraud. The SEC alleges that DMP issued $19 million in promissory notes and sold $4.5 million in equity interests by making false statements and omitting material information. DMP told investors that it owned various cemetery properties and that the notes would be secured by those properties. In reality, however, DMP did not own any such properties and therefore the notes were not secured. Defendants also told investors that the proceeds from the notes would be used to purchase and run cemeteries. Morrow actually used most of the proceeds to fund his personal interest in DMP, for high risk trading in securities and to pay interest owed to other DMP note holders. The SEC also alleges that Morrow lied to investors by telling them that DMP was debt free when, in fact, DMP had incurred substantial obligations to the note holders. Lastly, DMP failed to register the note offerings with the SEC. The Complaint alleges Defendants with violations of Sections 5(a), 5(c) and 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5(a)-(c). The SEC seeks injunctive relief, civil monetary penalties and disgorgement.
The notes were sold by Morrow’s long-time business associate Angelo Alleca through his investment advisory firm, Summit Capital. Alleca and Summit are the subjects of another lawsuit brought by the Commission charging them with operating a massive Ponzi scheme. See, SEC v. Alleca, et al., Lit. Rel. No. 22485 (Sept. 19, 2012).