Securities Lawyers Gone Wild – Todd A. Duckson

On June 2, 2014, the Securities and Exchange Commission (the “SEC”) announced that, on June 27, 2014, Judge Donovan W. Frank, of the U.S. District Court in St. Paul, Minnesota, issued an Opinion and Order imposing sanctions against securities lawyer Todd A. Duckson, a Minneapolis, Minnesota attorney, Capital Solutions Monthly Income Fund, LP, a Minneapolis-based real estate lending fund (the “Fund”), and Transactional Finance Fund
Management LLC (“TFFM”), a company owned by Duckson that became the Fund’s investment advisor in November 2008.

In the Order, Judge Frank imposed permanent injunctions against all three defendants, barred securities lawyer, Todd Duckson from serving as an officer or director of a publicly traded company for a period of ten years, and imposed financial sanctions exceeding $14.5 million against the Fund, $3.3 million against Duckson and TFFM, jointly and severally, and $1.8 million against Duckson individually.

The Commission’s complaint, which was filed in September 2010, alleged that the defendants engaged in securities fraud in connection with a series of unregistered offerings of interests in the Fund. The complaint alleged that in written documents provided to investors between March 2008 and late 2009, the Defendants made materially false and misleading statements that effectively hid the Fund’s deteriorating financial condition. The complaint also alleged that the Fund represented that it would use proceeds raised in the offerings primarily to make real estate loans and other investments, when in fact the Fund used most of the proceeds to pay senior lenders on properties the Fund had acquired and to make interest payments to existing investors. Duckson played a key role in drafting the written documents provided to investors, first as the attorney for the Fund and, in and after November 2008, as the Fund’s manager.

After a five-week trial, on October 22, the jury returned a verdict for the Commission and against all three Defendants, finding that Duckson and the Fund violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, that Duckson aided and abetted the Fund’s violation of Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder, and that TFFM violated Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. Finally, the jury found in favor of TFFM on the Commission’s claim that it violated Section 17(a) of the Securities Act.

In his June 27 Opinion and Order, Judge Frank permanently enjoined the Fund, TFFM and Duckson from violating, or aiding and abetting violations of, Section 17(a) of the Securities Act, and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder, and barred Duckson from serving as an officer or director of a publicly traded company for a period of ten years. Judge Frank also imposed the following monetary sanctions:

• $12,063,430 in disgorgement, plus $2,519,751 in prejudgment interest against the Fund;
• $2,960,771 in disgorgement, plus $340,862 in prejudgment interest against Duckson and TFFM, jointly and severally;
• $1,450,843 in disgorgement, plus $305,494 in prejudgment interest against Duckson individually; and
• Civil penalties of $50,000 and $15,000 against Duckson and TFFM, respectively.

For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton Florida, (561) 416-8956, by email at info@securitieslawyer101.com or visit www.securitieslawyer101.com.   This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information about going public and the rules and regulations affecting the use of Rule 144, Form 8K, crowdfunding, FINRA Rule 6490, Rule 506 private placement offerings and memorandums, Regulation A, Rule 504 offerings, SEC reporting requirements, SEC registration statements on Form S-1 , IPO’s, OTC Pink Sheet listings, Form 10 OTCBB and OTC Markets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, direct public offerings and direct public offerings please contact Hamilton and Associates at (561) 416-8956 or info@securitieslawyer101.com. Please note that the prior results discussed herein do not guarantee similar outcomes.

Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
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www.SecuritiesLawyer101.com