Yesterday, the California Department of Business Oversight issued this press release announcing that San Diego Superior Court Judge Joel R. Wohlfeil granted the DBO’s request for a temporary restraining order. The TRO bars further land sales, freezes all related assets and appoints a receiver to take possession of Silver Saddle Ranch and two affiliated entities, Silver Saddle Commercial Development and the Galileo Commercial Property Owners Association.
The DBO described the offering as as follows in its complaint:
"The centerpiece of the offering was a circa 1000-acre parcel of undeveloped, vacant, desert land in Kern County that was split into four thousand undivided, fractionalized interests to sell to investors. In addition to purchasing the undivided property interest, the investors were required to contribute $2,000.00 additional funds for each full unit to a pooled development fund, the 'Capital Improvement Fund'—touted as a “built in property development account”—that would, according to Defendants, eventually exceed $8,000,000.00. In addition, the investors were required to make recurring payments for membership in the Silver Saddle Ranch & Club and 'travel club' and other assessments and received an option to purchase the Silver Saddle Ranch & Club for $500,000.00."
The DBO is alleging both the unqualified sale of securities in violation of Corporations Code Section 25110 and securities fraud in violation of Corporations Code Section 25401. Judge Wohlfeil has will hold a hearing on whether to issue a preliminary injunction and confirm the receiver's appointment on October 16.