June 16, 2024

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On Tuesday, the Securities and Exchange Commission (SEC) reaffirmed charges against Michael J. French of Pendleton and two of his affected businesses, MJF Holdings LLC and MJF Capital LLC, for the alleged exploitation of investors, along with the misappropriation of significant investor funds.

211 Crooked Cedar Way LLC is a South Carolina limited liability company that the Securities and Exchange Commission says was formed to buy this property of the same address in Pendleton. The SEC says it was purchased with investor funds. (Photo/Ross Norton)Stated in the SEC’s legal document (pdf), French is alleged to have sold upward of $20 million in high-yield promissory notes to a vast number of investors nationwide via his enterprise, MJF Holdings.

It is alleged in the legal documentation that French falsely informed investors that the notes, promising a return of 12% on a one-year investment, were supported by a low-risk investment strategy, in which the said note revenue would be granted as loans to smaller businesses and/or used as investments in commercial loans fractionally to generate yields. French is claimed to have stated that the chosen loans intended for investment to support the promissory notes were strictly vetted and posed minor risk to the investors, according to the complaint.

However, the SEC alleges that this lending program was nothing more than a deception, with French using the capital he accumulated to compensate initial investors while also maintaining a luxurious lifestyle. According to the allegations within the complaint, French defaulted on these notes and terminated communication with the investors.

In addition to this, the complaint lodged in the United States District Court for the Northern District of Georgia, accuses French and his business MJF Holdings of breaching the Securities Act of 1933, and charges MJF Capital with being complicit in the alleged fraudulent activities carried out by French and MJF Holdings. Seven additional entities under French’s alleged control have also been named as relief defendants in the lawsuit.

Nekia Hackworth Jones, regional director of the SEC’s Atlanta Regional Office, underlined the SEC’s obligation to act swiftly to shield investors from individuals who manipulate the securities laws for personal gain, and to ensure the maximum possible protection of remaining investor assets. “As identified in the complaint, Michael French allegedly duped hundreds of investors, accumulating over $20 million through promises of high yield returns via a non-existent commercial loan investment venture,” she said.

The SEC is now seeking permanent enjoinment, a freezing of all related assets, a full accounting, disgorgement of all illegitimately obtained profits with prejudgment interest and also civil penalties. The investigation into this case has been executed by Grant Mogan, Andrew D. Mason and Tiffany Kunkle, with additional support from Taryn Hairston of the Atlanta Regional Office, and supervised by Thomas B. Bosch and Justin C. Jeffries. The legal proceedings are being tackled by Kristin Murnahan and Graham Loomis.