Waterford Funding Fraud

The Commission today announced the filing of a complaint in federal district court against Travis L. Wright, of Salt Lake City, Utah, based on his having carried out an offering fraud in which he raised nearly $145 million from approximately 175 investors. Wright sold these investors promissory notes issued by Waterford Loan Fund, LLC (the "Fund") that were purportedly secured by a lien on a trust that held all the assets of the Fund.

The Fund and its affiliate Waterford Funding, LLC are currently under the supervision of a Chapter 11 trustee, and their assets are being liquidated for the benefit of creditors. In re Waterford Funding LLC and Waterford Loan Fund, LLC, case no. 09-22584 (D. Utah).

The complaint alleges that, in raising these funds, Wright made numerous material misrepresentations to investors, including the following: 1) he assured them that their funds would be used only to make loans secured by commercial real estate, when in fact he used their funds primarily for loans and investments having nothing to do with real estate; 2) he represented to them that their promissory notes were secured by interests in a trust, but no such trust existed, and the notes were not secured; and 3) he represented that Waterford would never lend more than 50% of the value of the real estate in question. Wright also omitted to disclose to investors 1) that he never obtained an appraisal or valuation of real estate before lending investor funds against it; and 2) that he was using investor funds to pay for a lavish lifestyle for himself and his friends and family.

The Commission's complaint charges Wright with violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder. The complaint seeks an injunction, disgorgement, prejudgment interest and a civil penalty, and the issuance of an order prohibiting Wright from offering, selling or soliciting the sale of securities in a private or public offering, except for purchases or sales of securities by him for a personal account maintained at a broker or dealer registered with the Commission.