Charles Tralka, Thomas Braegelmann, Matthew Sullivan, Jordan Goodman, Good Steward Capital Management, Inc., and Robert L. Barr

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release 25856 / September 27, 2023

Securities and Exchange Commission v. Charles Tralka, Thomas Braegelmann, Matthew Sullivan, Jordan Goodman, Good Steward Capital Management, Inc., and Robert L. Barr, No. 5:23-cv-04958 (N.D. Cal. filed September 27, 2023)

SEC Charges Private Real Estate Funds’ Managers and Investment Adviser for Fraudulent and Unregistered Securities Offering

The SEC brought charges against defendants Charles Tralka, Thomas Braegelmann, Matthew Sullivan, Jordan Goodman, investment adviser Good Steward Capital Management, Inc. (“Good Steward”) and its owner Robert Barr, and relief defendants Secured Real Estate Income Fund I, LLC (“Income Fund”) and Secured Real Estate Income Strategies, LLC (“Income Strategies”) in connection with an alleged offering fraud that raised over $7.3 million from about 147 investors from April 2016 through March 2021. 

The SEC’s complaint alleges that the funds’ managing members Tralka and Braegelmann selected and managed the real estate investments, managing member Sullivan acted as investor relations, and managing member Goodman, a recidivist, drummed up potential investors through his radio programs.  The complaint also alleges that Good Steward and Barr, though described as the funds’ investment adviser, primarily served in an administrative capacity.  The SEC further alleges that both funds’ offering documents and marketing materials misled investors regarding: (1) the payment of reliable monthly distributions at an 8% annual rate; (2) Tralka and Braegelmann’s purported 50+ years of real estate investing experience; and (3) that SEC-registered investment adviser Good Steward would make the funds’ investment decisions.  In addition, the SEC alleges that, although Income Strategies’ offering circular stated that it would meet its $1 million investment threshold with investments from third parties, it in fact met this threshold through investments from related parties Income Fund and Good Steward and also failed to keep investor funds in escrow.

The SEC’s complaint, which was filed in the Northern District of California, charges Tralka, Braegelmann, Sullivan, and Goodman with violating the registration provisions of Sections 5(a) and (c) of the Securities Act of 1933 (“Securities Act”).  The complaint also charges Tralka, Braegelmann, Sullivan, Good Steward, and Barr with violating the antifraud provisions of Sections 17(a)(1) and (3) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder.  The complaint seeks permanent injunctions, disgorgement with prejudgment interest and civil penalties against Tralka, Braegelmann, Sullivan, Goodman, Good Steward, and Barr.  The complaint also seeks conduct-based injunctions against Tralka, Braegelmann, Sullivan, Goodman, and Barr, and officer and director bars against Tralka, Braegelmann, Sullivan, and Barr.  The complaint also seeks disgorgement plus prejudgment interest from relief defendants Income Fund and Income Strategies.

Goodman, without admitting or denying the allegations in the SEC’s complaint, consented, pre-filing, to the entry of a final judgment permanently enjoining him from violating the registration provisions of Section 5 of the Securities Act; prohibiting him from participating in the issuance, purchase, offer, or sale of any security in an unregistered offering by an issuer  (provided, however, that such injunction would not prevent Goodman from purchasing or selling securities for his own personal account); and ordering him to pay disgorgement with prejudgment interest and civil penalties, with the amounts to be determined by the court upon motion of the SEC.

The SEC’s investigation was conducted by Tony Regenstreif and supervised by Victoria A. Levin.  The litigation will be led by Daniel Blau and Daniel Lim and supervised by Gary Y. Leung.

• SEC Complaint