Two Charlotte-area businessmen have been accused by the Securities and Exchange Commission of running a fraud scheme that raised nearly $6 million, including from their friends and family.
The SEC filed a complaint with the U.S. District Court in Charlotte on Sept. 30 against Dana Bradley and Marlin Hershey, both of Cornelius, and eight companies owned by one or both men.
Neither Bradley nor Hershey were registered as a broker with the SEC during the time period of the securities offerings detailed in the complaint, according to the SEC. Under U.S. law, most brokers – people who handle securities transactions for others – must be registered with the SEC.
Hershey and Bradley told investors they would use the money to give loans for developing and rehabilitating homes in Charlotte – but instead they used the money to repay funds to other investors and pay themselves a combined $1 million in commissions, the SEC complaint alleges.
Bradley and Hershey did not respond to a request for comment Monday. Richard Kronk and Tad Cook are the Charlotte lawyers representing Bradley and Hershey. “We disagree with the SEC’s characterization of our clients and to that end we intend to vigorously defend our clients in and through the court process,” Kronk said in an email.
He did not discuss any other aspect of the case.
The eight companies named in the civil action complaint are: Performance Retire on Rentals, Distressed Lending Fund, Bryant Boys, D. Bradley, Inc., Erndit LLC, Hershey Enterprises, MW Enterprises and Performance Holdings.
The SEC complaint accuses Bradley and Hershey of raising money through multiple securities offerings, beginning in 2009.
The pair raised $3.4 million from 47 investors in 11 states in two unregistered securities offerings from 2009 to at least December 2017, the complaint says. Registered brokers typically buy and sell securities such as mutual funds and stocks.
Investors were told the money would be used for loans to Bluestone Investments, a third-party company, to rehab and rent homes in Charlotte, according to the SEC complaint.
But Bluestone was no longer taking loans from Performance Retire by 2013, according to the complaint. Still, Hershey and Bradley’s company Performance Retire continued to raise hundreds of thousands of dollars from investors, the SEC complaint alleges.
The pair raised nearly $2.5 million in another securities offering from 2013 to June 2015, the complaint says. Bradley and Hershey got a combined $1 million in commissions from those offerings, the SEC said.
The complaint also alleges Bradley and Hershey had been involved in other fraudulent securities offerings outside of the $6-million scheme — soliciting investors for companies owned by a Florida real estate developer. The pair received $1.7 million combined in commissions in those offerings, the SEC said.
Return of funds sought
The SEC complaint accused Bradley, Hershey and the businesses they own of three counts of fraud, operating as an unregistered broker-dealer, and aiding and abetting an unregistered broker-dealer.
The SEC is asking the court to require Bradley and Hershey pay back the funds.
Bradley and Hershey are listed as principals on the website for one of the companies accused in the fraud in the SEC complaint, Performance Holdings.
The site says the company has participated in more than $100 million in alternative investments since 1993.
Bradley is also president of the Patriot Military Family Foundation, and Hershey is on the council at Grace Covenant Church in Cornelius, according to the Performance Holdings website.
In 2009, the Observer highlighted Bradley’s involvement with The Patriot Gala, an event that raised money to support nonprofits which help wounded veterans and their families.