SEC OBTAINS VERDICT AGAINST ATTORNEY, REAL ESTATE FINANCE FUND AND FUND MANAGER

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 
SEC Obtains Jury Verdict in Its Favor Against Minneapolis Attorney, Real Estate Finance Fund and Fund Manager On Fraud Claims

The Securities and Exchange Commission announced today that, on October 22, 2013, following a five-week trial, a jury in federal district court in St. Paul, Minnesota, returned a verdict against 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, a company owned by Duckson that became the fund's investment advisor in November 2008. The Commission's complaint, which was filed in September 2010, alleged that the defendants engaged in securities fraud in connection with their offer and sale of interests in the Fund.

The complaint alleged that, from approximately March 2008 through December 2009, the Fund raised $21.6 million from investors in a series of unregistered offerings. During most of the period of the Fund's existence, it made "mezzanine loans" - or loans subordinate to more senior loans - to a single borrower. That borrower encountered financial problems in 2007 and, by May 2008, had defaulted on its obligations to the Fund. As a result, the Fund had no meaningful income-producing assets. 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 would use proceeds raised in offerings primarily to make real estate loans and other investments, when in fact the Fund needed to use 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.

At the conclusion of a five-week trial, the jury returned a verdict for the Commission and against all three Defendants. In particular, the jury found in favor of the Commission on its claims 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 Transactional Finance Fund Management LLC violated Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. Finally, the jury found in favor of Transactional Finance Fund Management LLC on the Commission's claim that it violated Section 17(a) of the Securities Act. The jury specifically found that Duckson and the Fund acted with knowledge in committing the violations described above.

The trial team from the Commission's Chicago Regional Office consisted of trial attorneys Eric M. Phillips, Daniel J. Hayes, Benjamin J. Hanauer, attorney Marlene Key-Patterson and paralegal Terri Roberts.

SEC FILES COMPLAINTS AGAINST FORMER WESTCAP SECURITIES, INC., PRINCIPALS

The following is an excerpt from the SEC website: September 23, 2011 “The Securities and Exchange Commission today filed two separate complaints against the three former principals of Westcap Securities, Inc., a now-defunct broker-dealer – namely Thomas Rubin (“Rubin”), Westcap’s then Chief Executive Officer, Christopher Scott (“Scott”), Westcap’s then Chief Compliance Officer, and Jeff Greeney, Westcap’s then Chief Financial Officer, and their related entities. The Commission alleges that Rubin and Scott committed securities fraud by, among other things, engaging in market manipulation in a broader manipulative scheme, and also, through their respective related entities, BGLR Enterprises, LLC and E-Info Solutions, LLC, violated the registration provisions of Section 5(a) and (c) of the Securities Act of 1933 (“Securities Act”) by selling stock in unlawful unregistered offerings. The Commission separately alleged that Greeney, through his related entity, Big Baller Media Group, LLC, violated the registration provisions by selling stock in unlawful unregistered offerings. The Commission alleges that Rubin and Scott, in violation of Section 17(a) of the Securities Act Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder, participated in a broader market manipulation ring that involved bringing companies public through reverse mergers; using Westcap to raise funds for the newly-created companies through purported private placements; and manipulating the public markets for those newly-created public companies, which allowed Rubin and Scott, through their related entities, to sell their holdings of these companies at artificially inflated prices for total proceeds exceeding $1.5 million. In particular, the Commission alleges that Rubin engaged in various manipulative activities including coordinated and matched trading activity, and that Scott similarly engaged in a number of manipulative activities including assuming trading authority and control over multiple accounts to conduct coordinated trading activity. In one email, Rubin complained to another scheme participant that he, not Rubin, should conduct the manipulative trading by writing, “my job is to bring in all the money and yours [is] to cover the bid,” which referred to entering buy orders to keep the stock price at an artificially inflated level. Scott, in an email to Rubin and another scheme participant, explained that he engaged in manipulation to keep an issuer’s stock price at a certain range - a range that he believed was needed to facilitate Westcap’s concurrent private placement involving that issuer. The Commission seeks injunctions, penny stock bars, disgorgement, and penalties from Rubin and Scott (and their related entities, BGLR Enterprises and E-Info Solutions), in addition to an officer and director bar against Scott because he was an officer of one of the microcap issuers. With respect to Greeney, the Commission alleges that he, through his related entity, sold shares in unregistered offerings of two of the microcap issuers for unlawful profits of approximately $330,000, in violation of the registration provisions of the Securities Act. Greeney and his related entity, Big Baller Media Group, have offered to settle the Commission’s allegations by consenting, without admitting or denying the allegations, to an injunction against future violations of Securities Act Sections 5(a) and 5(c), to be barred from participating in an offering of penny stock for a period of three years, and to pay disgorgement and penalties in amounts to be determined by the Court. The offer of settlement by Greeney and Big Baller Media Group are subject to the Court’s approval. Greeney has also offered to settle a yet-to-be instituted administrative proceeding against him, in which Greeney would consent, if the Court enters an injunction against him, to an order barring him from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization with the right to reapply for admission after three years.”