A Freeport concert promoter has been found liable for defrauding investors of nearly $1.6 million as he struggled to organize and promote Christian music concerts and festivals.
U.S. Magistrate Judge John H. Rich III of Portland entered a summary judgment for the U.S. Securities and Exchange Commission against Jeffrey E. Wall and his business, The Lighthouse Events LLC, on Tuesday in a 23-page decision describing their conduct as egregious.
“They cast a wide net in trolling for potential investors, indiscriminately inviting anyone with access to the internet and an interest in Christian music to fall victim to their fraudulent scheme,” Rich said in his ruling.
Paul Levenson, director of the SEC’s Boston Regional Office, said it’s human nature for people – particularly those without much experience in investing – to trust those who share religious or cultural affiliations.
“But this can leave people vulnerable to investment fraud,” Levenson said. “We encourage investors to understand the important details of the investment, such as the use of funds and the risk of loss.”
The case highlights an area known as affinity fraud, in which scams prey upon members of identifiable groups.
According to information posted on The Lighthouse Events Facebook page, Wall and his wife, Gail, are natives of California who founded the company in October 2008 after moving to Maine the previous year. They have hosted more than 700 concerts with help from more than 200 volunteers, according to the post.
Jeffrey E. Wall, founder of The Lighthouse Events, a Christian-concert promotion company in Freeport, has been found liable for defrauding investors of nearly $1.6 million.
Federal regulators filed a complaint in April 2019 saying that Wall and his company solicited more than $3.1 million from roughly 150 investors between January 2014 and October 2018 to promote Christian entertainment events. Wall, 56, operated Lighthouse as an unincorporated entity for seven years before forming a limited liability company in April 2015.
A year earlier, Wall and his company began borrowing money from companies that provide short-term advances to small businesses in need of immediate cash. Most of the borrowing, which climbed to $700,000 from more than a dozen cash-advance companies, occurred after mid-2016, and repayments with interest totaled roughly $1.1 million, according to the SEC.
When Wall and Lighthouse failed to keep up with repayments, at least five such companies went to court and garnished bank accounts and the proceeds from online ticket sales to concerts, it said. Wall and Lighthouse also solicited investors at concerts and festivals as well as on the company website and through email marketing. Rich described these solicitations as “multiple, repeated, brazen misrepresentations.”
One such solicitation read, “Become a financial partner with our summer festivals. Help us spread the message of Christ plus earn 20% on your investment.”
Wall guaranteed repayment of principal in monthly installments with a fixed annual return ranging from 10 percent to 25 percent, and he told some investors their returns were secured and not dependent on the success of any concert or music festival, the SEC said. Instead, he used some investor funds to pay existing debt and make payments to earlier investors.
On Tuesday, Rich noted that about 90 investors are owed a total of almost $1.6 million in unpaid principal, and some have not received any installments. The Maine Office of Securities sent Wall a letter on April 17, 2018, ordering him to stop issuing unregistered securities in the form of promissory notes, but the SEC said he continued.
Tuesday’s judgment orders Wall and Lighthouse to pay the roughly $1.6 million owed to investors, along with $202,056 in interest. Further, both Wall and Lighthouse received civil penalties of just under $1.6 million apiece. All are due by the end of April.
“Mr. Wall and Lighthouse were not in the business of selling securities, should not have been, and should not be in the future,” Rich wrote. “Rather, they were promoters and organizers of Christian music concerts, a business that they remain free to pursue.”
The company website for Lighthouse is no longer accessible. In January, the Better Business Bureau said it received an email from Lighthouse saying it is no longer in business.
Neither Wall nor his attorney, Kevin Sullivan, responded to a request for comment.
“A lot of retail fraud we see comes out of those personal connections,” said Levenson, of the SEC’s Boston office. “Someone is much more likely to take investment advice from someone who goes to their church or synagogue or club. People really do have to be cautious when it comes to investments.”
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