On August 1, 2025, the Securities and Exchange Commission (“SEC”) announced (here) that it charged a Wisconsin resident and three limited liability companies that he owns and controls – Investors Capital LLC, Global Investors Capital LLC, and High Income Performance Partners LLC (collectively, the “Entity Defendants”) – with perpetrating a real estate-related offering fraud.
According to the SEC’s complaint (here), from approximately May 2020 through at least January 2024 (the “Relevant Time Period”), Defendants allegedly solicited investors by promising to purchase, fix, and flip real estate for profit. Defendants collectively raised at least $1.9 million from at least 30 investors throughout the United States, including at least nine investors in Wisconsin. Many of the investors were members of the Nigerian-American community. According to the SEC, defendant misused the money raised by spending at least 80% of it on himself and his other ventures, and not on the promised real estate transactions.
The SEC alleged that defendant held himself out as an “Incredibly Successful Entrepreneur” who amassed a multi-million dollar real estate portfolio after emigrating from Africa to Wisconsin in 2016 “with just $4,700,” to become a “notable and sought after millionaire investor” who serves as a speaker, life coach, mentor, consultant, and philanthropist. Defendant allegedly made these and similar representations on his website, on social media sites, during presentations to potential investors, and during financial coaching seminars.
According to the SEC, defendant’s story was misleading. Defendant allegedly had sufficient assets when he emigrated to the United States to support himself and his family without needing to work. Likewise, said the SEC, defendant’s claims on his website in 2024 that he owned “real estate assets currently valued at over $23 million,” were also untrue. According to public records searches, noted the SEC, during the Relevant Time Period, defendant and the entities he controlled – including defendants Investors Capital, Global Investors Capital, and High Income Performance Partners (together, the “Entity Defendants,”) – owned only 11 properties with a collective value of approximately $1 million.
The SEC alleged that defendant enticed investors with promises of lucrative returns on investments (or “ROI”) in one year or less. Defendants allegedly promised different investors a variety of different ROI, typically in the range of 10% to 30%, but at times higher. The SEC alleged that defendants usually promised to make a payment to investors within three to 12 months consisting of the ROI and the return of their principal investment.
According to the SEC, defendants usually entered into written investment agreements with investors making their first investment. The SEC claimed that the agreements typically stated that the relevant Entity Defendant would provide services, including purchasing, fixing, and flipping properties, on behalf of investors and “acquir[ing] investment property that befits the investment fund.” Defendants allegedly told investors that profits would be generated through defendant’s investment of their funds in either a specific property or in unspecified real estate to be purchased, renovated, and sold. Some investors, said the SEC, subsequently entered into verbal agreements with defendant and one or more of the Entity Defendants for additional real estate investments, subject to terms similar to the terms of their initial investments.
Regardless of whether the investment agreements were written or verbal, defendant allegedly told investors that the money they invested was to be used for real estate development projects with repayment of their investment principal and ROI by a specified time.
Despite these core representations and promises, claimed the SEC, defendants spent only a small fraction (less than one-fifth) of the investors’ money on purchasing or renovating real estate. Instead, alleged the SEC, defendant commingled investor funds in his personal bank accounts and accounts for the Entity Defendants and his other businesses, and often used the investors’ funds for other purposes, including paying his personal living expenses, buying jewelry and automobiles, and paying for travel and entertainment.
Although the written investment agreements identified at least l0 specific properties that defendants were going to purchase, fix, and flip, the SEC alleged that public records showed that during the Relevant Time Period, seven of those 10 properties were never owned by defendants and, of the three properties that were acquired by defendant or a company he controlled, two were subject to foreclosure proceedings.
According to the SEC, Defendants have not paid most investors as promised in the written and verbal investment agreements. The SEC alleged that investors who contacted defendant seeking repayment of their investment principal and ROI when their investment period ended were met with a series of excuses and delays.
In addition, maintained the SEC, several of the investors sued defendant and/or the Entity Defendants when the defendants failed to meet their payment obligations. Despite these lawsuits, said the SEC, defendants continued to solicit funds for additional “successful investments” without disclosing that defendants had not repaid prior investors.
The SEC alleged that, based on the foregoing conduct, defendants violated the federal securities laws, namely Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule l0b-5 promulgated thereunder.
Accordingly, the SEC seeks a judgment against defendants that: (a) imposes permanent injunctive relief, including prohibiting defendant from offering or selling securities; (b) orders disgorgement of ill-gotten gains, plus prejudgment interest; and (c) imposes civil monetary penalties.
The SEC filed the action (SEC v. Nantomah, Case No. 2:25-cv-01130) in the United States District Court for the Eastern District of Wisconsin.
Takeaway
Nantomah reflects an ongoing effort by the SEC to target affinity fraud.
Affinity fraud is a deceptive investment scheme that preys on trust and close relationships within specific communities or social groups.[1] These groups often share a common identity, such as religious affiliation, ethnicity, profession, or membership in a social organization. The promoter of the fraud either belongs to the group or uses a trusted insider to promote the scam, making it more believable and harder to detect.
Victims of affinity fraud are often persuaded to invest in fraudulent ventures with promises of high returns and minimal risk. Because the offer comes from someone they trust—or appears to—individuals may forego due diligence and even encourage others in the group to invest, amplifying the damage.
Affinity fraud and real estate scams often intersect in ways that make these schemes particularly damaging and difficult to detect.
Real estate is an attractive vehicle for fraud because it typically involves large sums of money and complex transactions that can be difficult for the average investor to fully understand. Fraudsters use this complexity to their advantage, presenting fake or exaggerated investment opportunities that appear legitimate. They may promise high returns from flipping houses, investing in commercial developments, or participating in exclusive property deals. These offers are often framed as opportunities to build wealth within the community or support shared values, making them emotionally compelling.
One case of an alleged real estate affinity fraud involved a Miami-based developer who allegedly orchestrated a $135 million Ponzi scheme targeting the South Florida Cuban exile community. The developer allegedly used his cultural ties and community standing to gain trust, convincing over 400 investors to fund real estate projects that either didn’t exist or were grossly misrepresented.
Another case in California saw an alleged promoter targeting the Filipino-American community with promises of high returns from legal funding tied to real estate. The alleged scam operated as a Ponzi scheme, using new investors’ money to pay earlier ones, while the fraudster lived lavishly off the proceeds.
The SEC and other regulators have warned that affinity real estate scams often involve fake deeds, inflated property values, or nonexistent developments, and they urge investors to verify all claims independently—even when the opportunity comes from someone within their group.
[1] This BLOG has examined enforcement actions and the settlement of enforcement actions involving affinity fraud on numerous occasions. To find these articles, visit the “BLOG” tile on our website and enter “affinity fraud” in the “search” box.
