A Press Release was issued by the Colorado Division of Securities in September, 2015, regarding an agreement to enter a Cease and Desist Order with respect to Tennyson Place, LLC, Allante Properties, LLC, Darell Schmidt and Daren Schmidt.
Please note that Allante was fully cooperative with the inquiry made by the Colorado Division of Securities and successfully resolved the matter in about 60 days, prior to the issuance of the Press Release. Unfortunately, I have received comments by investors that were confused by the Press Release.
Allante structures its development opportunities with special purpose entities which sell securities to raise capital for acquisition, planning, and construction. Such securities are designed to qualify for exemption from registration under Regulation D of the SEC rules, which means that there are numerous laws which Allante must abide by, both at the state and federal levels. The Colorado Division of Securities looked into and requested documents from three of our offerings and raised two issues that required our attention:
1) Allante, as manager of Tennyson Place, LLC, should have timely filed a Form D with the SEC (and transmitted a copy to the Colorado Division of Securities).
2) We initiated a note offering to investors with whom we had a pre-existing and substantial relationship, under the exemption of Rule 506(b). However, because there was ongoing advertising for a subsequent equity offering under Rule 506(c), we were advised that the two offerings would be deemed joined, which would disqualify our exemptions.
Allante recognized these issues and with our desire to be compliant, took immediate action to resolve them. The Form D was filed for Tennyson Place in September, 2015, and the investments made by the non-accredited investors in Tennyson Place in the Rule 506(b) offering were immediately returned to the investors in August, 2015. No investors were harmed. Without admitting any wrongdoing, we volunteered to enter into a stipulated “cease and desist order” in which we agreed 1) not to offer or sell unregistered securities, 2) not to violate Colorado statues for securities that are being offered or sold, and 3) not to engage in any conduct in violation of the Colorado Securities Act (essentially the same rules which must be followed by all who sell securities). We then proceeded with, and successfully closed, our $8 Million Tennyson Place Offering, with $14 Million of bank-loaned construction financing, and we timely broke ground in November, 2015.