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On September 5, 2019, the Securities and Exchange Commission filed an emergency action against Glenn C. Mueller, his company Northridge Holdings, Ltd., and other affiliated entities charging them with engaging in a $41 million fraudulent, unregistered securities offering. Yesterday the United States District Court for the Northern District of Illinois entered orders imposing a preliminary injunction, freezing Mueller’s assets, and appointing a receiver over the assets of the other defendants. The orders were entered with the consent of the defendants in the action.

The SEC’s complaint alleges that since at least May 2014, the defendants have sold more than $41 million in promissory notes in unregistered transactions to over 300 investors throughout the country, many of whom were unaccredited and of retirement age. According to the complaint, Mueller and Northridge represented that investors’ funds would be used to purchase and renovate multi-unit real estate properties, resulting in profits derived from higher occupancies and rents, and/or the resale of the properties or individual units. They touted their financial success and portrayed the note investments as “safe” and “low risk,” calling certain notes “CDs.” According to the SEC’s complaint, Northridge’s business was not profitable and did not generate sufficient revenues to cover its expenses and pay promised returns to investors, and investors’ funds were not used as represented. The defendants used a significant portion of the funds raised from new investors to pay returns to earlier investors and to pay “finders” who referred investors to Northridge, as well as for securities trading and purported loans to members of Mueller’s family.

The SEC’s complaint charges Glenn C. Mueller, Northridge Holdings, Ltd., Southridge Holdings, Ltd., Eastridge Holdings, Ltd., Brookstone Investment Group, Ltd., Guardian Investment Group, Ltd., Unity Investment Group Ltd., and Amberwood Holdings L.P. with violating the registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933, and the antifraud provisions of Section 17(a) of the Securities Act, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder, and Mueller and Northridge with violating Rule 10b-5(b). The SEC’s complaint seeks injunctions against future securities law violations, disgorgement of the defendants’ ill-gotten gains, and civil penalties.

The SEC’s investigation, which is continuing, was conducted by Christine Jeon, Timothy Stockwell, and Wilburn Saylor and was supervised by Amy Flaherty Hartman of the Chicago Regional Office. The SEC’s litigation will be led by Michael Foster. The SEC appreciates the assistance of the Illinois Securities Department, the Massachusetts Securities Division, the New Hampshire Bureau of Securities and the New Jersey Bureau of Securities in this matter.