The Arizona Corporation Commission has found with unanimous consent that Bear Fruit Films violated the Securities Act registration and antifraud provisions by misleading 72 Christian investors out of $1.5 million for selling securities to finance faith-based film products.
From the Commission brief:
From at least March 2016 to March 2018, Respondents offered and sold unregistered securities in the form of investment contracts and/or notes to at least seventy-two investors to purportedly fund faith-based film projects. They raised, and subsequently squandered, over $1.5 million from people who trusted them because they were part of the Christian community.
Respondents would typically distribute marketing material to potential investors that they called business plans. The business plans all showed quixotic investment scenarios and emphasized the financial success of movies Bear Fruit Films, LLC (“BFF”) did not produce.
In all cases, investors were promised 125% of their investments plus a percentage of the project’s net profits. Each percentage point was a “unit.” These terms were set out in one-page contracts with BFF letterhead (the “BFF Agreements”). Many of the investors were given a guarantee on at least half of their investment, even though there were no funds set aside for the guarantee.
Respondents did not disclose to any investors that BFF had never made a profitable film and had never paid its investors. Although the Respondents made sure to pay themselves, not a single investor has received the promised returns. The vast majority of them have not seen a penny of their original investments, despite guarantees and promises the Respondents did not keep.
The Commissioners ordered that restitution paid in the amount of $1,590,500 and administrative penalties against Bear Fruit Films at $110,000.