Broker-dealer Brewer Financial Services LLC (BFS) and investment adviser Brewer Investment Advisors LLC (BIA), owned and operated by Steven Brewer and Adam Erickson, were charged by the SEC with conducting fraudulent offerings of promissory notes.  An emergency court order was obtained, freezing the assets of the 2 financial firms.

Brewer and Erickson raised $5.6 million from investors, providing offering materials that misstated or concealed how their funds would actually be used.  They also misrepresented the risk level of the investment and the financial condition of their companies while, unbeknownst to investors, they funneled nearly all of the offering proceeds to subsidize their parent company Brewer Investment Group (BIG) and one of its subsidiaries during a time when they were under significant financial distress.

The offering - promissory notes issued by a company based in Isle of Man - was conducted through the B/D and IA firms.  Brewer and Erickson drafted, reviewed or approved the offering documents for the notes, which implicitly and explicitly represented that the proceeds of the offering would be used to procure collateral in order to secure the promissory notes being issued to investors. 

Instead, all but 10% of the proceeds went to BIG and spent at Brewer's direction - while the promised collateral was never obtained.  The offering materials failed to disclose the extent to which the Brewer companies were losing money, the fact that BIG had failed to make required interest payments on earlier investors' promissory notes, and the fact that BIG had failed to meet its own payroll obligations.

The SEC's Denver Regional Office conducted the investigation, with assistance from the Denver and Chicago offices and FINRA. [SEC PR 10-208, 10/29]