Credit Nation Sued by SEC; Asset Freeze, Receiver Appointed

SEC obtains asset freeze on Credit Nation.

On December 1, 2015 the Securities and Exchange announced that James Torchia and Credit Nation agreed to the entry of a Consent Order that halted an alleged ongoing investment fraud involving the sale of promissory notes and life settlement contracts.

On April 25, 2016 the Court granted the SEC’s motion for a preliminary injunction, asset freeze, and appointed a Receiver over CN’s business.

On November 10, 2015, the SEC filed an action in federal court in Atlanta against Credit Nation and James Torchia, and a number of business he operates; Credit Nation Capital, LLC, Credit Nation Acceptance, LLC, Credit Nation Auto Sales, LLC, American Motor Credit, LLC, and Spaghetti Junction, LLC, a Nevada limited liability company.

The SEC’s complaint alleges that since 2009, CN has raised tens of millions of dollars from investors who purchased unregistered promissory notes by promising a 9% return. The complaint further alleges that Credit Nation touts the safety of the promissory notes, as “100% asset backed.” In reality, according to the complaint, CN Capital has generated substantial losses each year since at least 2011 and its liabilities far outweigh its assets.

The SEC contends that contrary to representations made to investors portraying the notes as a secure investment capable of generating reliable investment returns, CN pays investors promised investment returns using new investor money. The complaint alleges that neither CN’s multi-million dollar per year operating losses nor its balance sheet has been properly disclosed to investors.

The complaint also alleges that Credit Nation sells unregistered fractional interests in life settlement contracts to investors and that James Torchia disregards corporate formalities and commingles CN’s funds with those of other entities he controls to support his and his family’s other businesses and to pay his personal expenses.

The complaint alleges that the defendants violated and/or aided and abetted or caused violations of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Section 17(a) of the Securities Act of 1933. The complaint also alleges that James Torchia, CN Capital and CN Acceptance violated the registration provisions of the securities laws in Section 5 of the Securities Act.

On November 20, 2015, the Court approved an Order by which the defendants agreed not to offer or sell any additional promissory notes or to advertise investment opportunities via general solicitations. On April 25, 2016 the Court granted the SEC’s motion for an injunction and asset freeze.  More information about the court proceedings and information for investors can be found here.

The Law Office of David Liebrader practices exclusively in the field of investment loss recovery and our securities attorneys have successfully resolved over 1000 investment loss cases over the past 20 years. Recoveries for clients top $40 million. The types of claims we have successfully handled include those involving unsuitable investments (suitability claims), excessive trading or “churning”, misrepresentations and omissions, unauthorized trading, over-concentration of illiquid or overly risky investments, pump and dump scams involving “penny stocks”, direct participation programs (private placements) involving real estate investment trusts (REITS), oil and gas exploration programs, leasing equipment deals and receivable financing, promissory notes whether sold through a broker dealer or as part of the outside business activities of a registered representative, ponzi scheme losses, failure on the part of the broker dealer to perform due diligence, state securities law (blue sky) violations and failure to supervise.

If you have suffered investment losses please call The Law Office of David Liebrader at (702) 380-3131 for a free, confidential consultation