SEC v. James R. Collins; and Robert F. DiMeo, No. LR-25219, Northern District of Illinois (Sept. 23, 2021) — Press Release

SEC Charges Principals of Subprime Automobile Finance Company with Fraud Litigation Release No. 25219 / September 23, 2021 Securities and Exchange Commission v. James R. Collins and Robert F. DiMeo, Civil Action No. 1:21-cv-05040 (N.D. Ill. filed September 23, 2021) The Securities and Exchange Commission today announced fraud charges against two former executives of a subprime automobile finance company for misleading investors about the subprime automobile loans that backed its $100 million offering. The SEC's complaint, filed in U.S. District Court for the Northern District of Illinois, alleges that James Collins and Robert DiMeo, the former principals of Honor Finance, LLC, were responsible for false and misleading statements about, and engaged in deceptive conduct regarding, Honor's servicing practices in connection with the Honor Automobile Trust Securitization 2016-1 (HATS). The complaint alleges that Honor packaged together several thousand automobile loans Honor funded to serve as collateral for the HATS offering, which raised $100 million through the sale of interest-bearing notes to investors. According to the SEC's complaint, Collins and DiMeo took various steps designed to artificially inflate the value of the collateral underlying HATS. Specifically, the complaint alleges that Collins and DiMeo were responsible for, among other things, including loans in the deal that were not eligible to be included in the securitization vehicle, extending loan repayment dates without borrower knowledge, and forgiving payments due from delinquent borrowers. The complaint claims that, because of these improper practices, the servicing and performance information Honor provided to investors at the time of the offering and in later monthly reports was false. The SEC's complaint charges the defendants with violating or aiding and abetting violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, or acting as a control person for Honor's violations of the Exchange Act. The complaint seeks permanent injunctions, officer and director bars, disgorgement with prejudgment interest, and civil penalties. The SEC's investigation was conducted by Jason Anthony and Amy Sumner, with assistance from Daniel Nigro. The investigation was supervised by Laura Metcalfe and Paul Pashkoff. The litigation is being handled by David Nasse and Christopher Martin. SEC Complaint

SEC Charges Principals of Subprime Automobile Finance Company with Fraud Litigation Release No. 25219 / September 23, 2021 Securities and Exchange Commission v. James R. Collins and Robert F. DiMeo, Civil Action No. 1:21-cv-05040 (N.D. Ill. filed September 23, 2021) The Securities and Exchange Commission today announced fraud charges against two former executives of a subprime automobile finance company for misleading investors about the subprime automobile loans that backed its $100 million offering. The SEC's complaint, filed in U.S. District Court for the Northern District of Illinois, alleges that James Collins and Robert DiMeo, the former principals of Honor Finance, LLC, were responsible for false and misleading statements about, and engaged in deceptive conduct regarding, Honor's servicing practices in connection with the Honor Automobile Trust Securitization 2016-1 (HATS). The complaint alleges that Honor packaged together several thousand automobile loans Honor funded to serve as collateral for the HATS offering, which raised $100 million through the sale of interest-bearing notes to investors. According to the SEC's complaint, Collins and DiMeo took various steps designed to artificially inflate the value of the collateral underlying HATS. Specifically, the complaint alleges that Collins and DiMeo were responsible for, among other things, including loans in the deal that were not eligible to be included in the securitization vehicle, extending loan repayment dates without borrower knowledge, and forgiving payments due from delinquent borrowers. The complaint claims that, because of these improper practices, the servicing and performance information Honor provided to investors at the time of the offering and in later monthly reports was false. The SEC's complaint charges the defendants with violating or aiding and abetting violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, or acting as a control person for Honor's violations of the Exchange Act. The complaint seeks permanent injunctions, officer and director bars, disgorgement with prejudgment interest, and civil penalties. The SEC's investigation was conducted by Jason Anthony and Amy Sumner, with assistance from Daniel Nigro. The investigation was supervised by Laura Metcalfe and Paul Pashkoff. The litigation is being handled by David Nasse and Christopher Martin. SEC Complaint