Federal regulators are accusing a Freeport man and his company of investment fraud, saying he solicited $3 million from nearly 150 investors by falsely promising to use their money to organize Christian music concerts and festivals.

The U.S. Securities and Exchange Commission said in a complaint filed Thursday in U.S. District Court that concert promoter Jeffrey E. Wall and his business, The Lighthouse Events LLC, instead used some investor funds for other purposes, such as paying off debts and investors from previous deals. The complaint says Wall also made promises and guarantees to investors that he did not honor.

According to The Lighthouse Events’ website, the company is an active business founded by Wall and his wife, both avowed Christians, that has organized over 700 faith-based concerts since its founding in 2008. The company organized and promoted concerts for acts such as the Oak Ridge Boys in March of last year, and other Christian-themed groups such as Vertical Workshop and Sanctus Real that often perform in small church settings.

Wall did not respond to a request for comment Thursday.

The SEC complaint says that from about January 2014 through October 2018, Wall and Lighthouse raised more than $3 million from roughly 145 investors to promote Christian entertainment events in New England.

Wall and Lighthouse falsely told potential investors that their money would be used solely to promote and host the concerts and festivals, the complaint says, adding that Wall also claimed repayment of the investment was “secured” and “guaranteed” within one year.

According to the complaint, a typical mass solicitation email said: “Become a financial partner with our summer festivals. Help us spread the message of Christ plus earn 20% on your investment. To learn more please e-mail Jeff Wall …”

However, Wall used some investor funds for other expenses, including payment of Lighthouse’s existing debt and payments to earlier investors using later investors’ money, the complaint says. Wall and Lighthouse also failed to disclose information to potential investors about Lighthouse’s deteriorating financial condition from declining ticket sales and its growing high-interest debt from short-term loans, the complaint says.

Wall and Lighthouse have failed to repay roughly $1.6 million of the funds it fraudulently collected from investors, the SEC says.

The complaint alleges that Wall and Lighthouse violated anti-fraud provisions of the Securities Act of 1933. The SEC is seeking permanent injunctions, civil penalties and disgorgement plus interest against Wall and Lighthouse.

The Better Business Bureau website lists five complaints against Lighthouse, all from investors who say the company failed to repay them with interest as promised.

“I invested over $51,000 with a guaranteed return of 20%, paid back monthly at $5140, starting … Dec. 1, 2017 (through) Nov. 1, 2018,” one complaint says. “Lighthouse Events has failed to keep their commitment, to date, we have received only $35,000, still owed over $25,000.”

The company responded on the bureau’s website.

“The Lighthouse Events agrees we owe this money to (redacted). We have repaid 60% of the partnership and (are) working hard to get the balance repaid,” it wrote. “Ticket sales have been off this past year which has made it difficult to pay off the balance of the partnership. We are a Christian ministry and we did not try to deceive anybody. We simply have struggled with ticket sales, making it difficult to stay current.”

In the 14-page SEC complaint filed with the court, regulators accuse Wall and his company of “affinity fraud,” which refers to investment scams that prey upon members of identifiable groups such as religious or ethnic communities.

The complaint cites an email Wall sent to one potential investor in which he indicated that the investment was guaranteed to be repaid regardless of the company’s financial performance.

“We need investors to help us pay deposits for our summer festivals. This is going to be our biggest year of ministry and (we) need new investors,” the complaint quotes Wall’s email as saying. “The loan is secured whether we make money or not on the festival. Investors are the backbone of our ministry. Without financial partners, we could not move forward booking artists so please know how much we value our investor team. To date all our investors have been paid back 100% of the money invested.”

According to the complaint, Wall and Lighthouse made no effort to sequester and track investor contributions to ensure the money was used solely for the purposes promised to investors.

SHAKY FINANCES

From the beginning, Wall primarily used a single company bank account to deposit all Lighthouse revenues and pay all expenses, it says. The complaint describes Lighthouse as a financially unstable company with court-ordered judgments against it brought by short-term lenders.

“As the profitability of Lighthouse’s concerts and festivals dwindled and its borrowing from cash advance companies increased, investor funds were also used for the payment of daily remittances and court-ordered judgments to the cash advance companies as well as for payments to prior investors on older promissory notes,” the complaint says.

Christopher Branson, a partner at Portland law firm Murray Plumb & Murray who is not involved with the case, said it’s not uncommon for a legitimate business to run afoul of securities laws when it becomes desperate for cash.

Branson, chair of the firm’s business and corporate law practice group, said often it is the overzealous promises a troubled business makes in order to secure the investment that lead to legal violations down the road.

“It’s a fair law, which is, if you’re going to make promises as an inducement to an investment, you’d better be prepared to honor them strictly,” he said. “It’s not a defense that you were under stress and that you were desperate for the money.”

According to the Lighthouse website, the company was founded in October 2008 by Wall and his wife, Gail, both California natives and devout Christians. It says Jeffrey Wall is a veteran producer of Christian radio programming, and that the couple decided to start the concert-promotion business after moving to Maine in 2007.

“After much prayer and seeking, Gail came up with the idea of a Christian concert ministry. She encouraged me to start The Lighthouse Events, after all I had been around Christian music for 20 years,” Jeffrey Wall wrote. “That is when Romans 8:28 came to life for me. It says, ‘And we know that God causes everything to work together for the good of those who love God and are called according to his purpose for them.'”

J. Craig Anderson can be contacted at 791-6390 or at:

canderson@pressherald.com

Twitter: jcraiganderson

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