SEC v. JERRY LEE FARISH; and NEW SUMMIT HOMES, INC., No. 4:19-cv-623, Northern District of Texas (Aug. 8, 2019) — Complaint

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION

SECURITIES AND EXCHANGE COMMISSION,

Plaintiff,
 C.A. No.:  4:19-cv-623
v.

JERRY LEE FARISH, and
NEW SUMMIT HOMES, INC.
Jury Trial Demanded

Defendants.

COMPLAINT
Plaintiff Securities and Exchange Commission (“SEC”) files this Complaint against
Defendants Jerry Lee Farish (“Farish”) and New Summit Homes, Inc. (“New Summit”)
(collectively, “Defendants”) and alleges as follows:
SUMMARY OF THE ACTION
1. Farish is a long-time commercial airline pilot for an international airline based in
North Texas.  Between March 2016 and June 2017, Farish raised over $1 million from fellow
pilots and other investors in a fraudulent securities offering for New Summit, a home-building
company he controlled.
2. Farish represented to the investors that New Summit would use their investment
funds to build a high-end home on the “Little Bluestem” lot in Westlake, Texas, and that
investors would receive their principal plus sizeable returns once the house was sold.  Farish also
told each of the investors that their investment would be secured by the second lien on the
property, subordinate only to a first mortgage held by a financial institution.

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COMPLAINT           Page 2
3. In truth, Defendants sold the same investment to three different investors,
purporting to provide all three investors with the same second lien position on the Little
Bluestem property.  Further, Defendants did not use investor funds to build the home as
promised.  Instead, Defendants commingled the investor funds in a New Summit bank account
with funds from other sources, and then spent substantially all of the money on personal items
and other expenses unrelated to the project, including entertainment and retail expenses, personal
mortgage and rent payments, and lavish vacations.
4. Despite raising more than $1 million for the Little Bluestem project, the lot and
New Summit’s bank account are empty.  The investors received nothing from Defendants in
return for their investments.
5. By reason of this misconduct, Defendants violated, and unless enjoined will
continue to violate, the antifraud provisions of the federal securities laws, specifically Section
17(a) of the Securities Act of 1933 (the “Securities Act”) [15 U.S.C. § 77q] and Section 10(b) of
the Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5
thereunder [17 C.F.R. § 240.10b-5].
  The SEC brings this action seeking permanent injunctive
relief, disgorgement of ill-gotten gains plus prejudgment interest, civil penalties, and all other
equitable and ancillary relief the Court deems necessary.
JURISDICTION AND VENUE
6. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d), and
22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v(a)] and Sections 21(d), 21(e),
and 27(a) of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa(a)].  The investments
offered, purchased, and sold as alleged herein were securities as defined under the Securities Act

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COMPLAINT           Page 3
and the Exchange Act.   Defendants directly or indirectly made use of the means or
instrumentalities of interstate commerce or the mails in connection with the transactions, acts,
practices, and courses of business alleged herein.
7. Venue is proper in this district pursuant to Section 22(a) of the Securities Act [15
U.S.C. § 77v(a)] and Section 27(a) of the Exchange Act [15 U.S.C. § 78aa(a)].  Certain of the
transactions, acts, practices, and courses of business constituting violations of the federal
securities laws occurred within this district.  Defendants offered and sold securities at issue in
this district and the real property related to the investment is located in Westlake, Tarrant
County, Texas, which is in this district.  Further, Farish resides in this district and New Summit’s
principal place of business is in this district.
DEFENDANTS
8. Defendant Farish is an individual who resides in Tarrant County, Texas.  During
the relevant time period, Farish managed and controlled New Summit and was its de facto owner
and Chief Executive Officer (“CEO”).  During the SEC’s investigation preceding the filing of
this Complaint, Farish asserted his Fifth Amendment privilege against self-incrimination and
refused to testify.  On January 8, 2019, the U.S. Attorney’s Office for the Northern District of
Texas indicted Farish on one count of wire fraud relating to his conduct in connection with the
Little Bluestem project.
9. Defendant New Summit is a Texas corporation with its principal place of business
in Tarrant County, Texas.  On January 25, 2019, the Texas Secretary of State forfeited New
Summit’s charter.  On information and belief, New Summit has no current operations.

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COMPLAINT           Page 4
FACTUAL ALLEGATIONS

A.  Background
10. Farish has been a licensed commercial airline pilot for a North Texas-based
international airline for approximately thirty years.  During his career as a pilot, Farish has also
been involved in a number of real estate side businesses.
11. Farish started New Summit in late 2014.  The Secretary of State filings for New
Summit list Farish’s three sons as the company’s owners, officers, and directors.  On information
and belief, Farish excluded his name from the Secretary of State filings in an effort to separate
New Summit from his legal problems related to a prior real-estate venture.
12. Farish’s sons, however, lacked any business education or experience and
exercised little-to-no independent judgment or decision-making at New Summit.  Farish was
New Summit’s de facto owner and CEO, and he controlled every aspect of the company,
including how it spent money.  Farish held himself out as New Summit’s CEO, and Farish was
also the one who solicited investors and communicated directly with investors about their
investments.
13. New Summit operated in two ways: first, building homes directly for the
individuals who planned to live in them; and, second, securing investors to provide capital for
New Summit to build and then sell new homes for a profit.  In fact, New Summit did build and
sell a number of homes over the approximately two years it was in operation, particularly for
people in the first group who planned to live in them.  Farish, however, used New Summit as a
vehicle to defraud investors and misappropriate funds from investors in the second group who
invested in New Summit projects for a profit.

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COMPLAINT           Page 5
14. To raise funds from these investors, Farish targeted fellow airline pilots with large
balances in their 401(k) accounts, extolling the benefits of creating a self-directed IRA to invest
in New Summit projects.  According to New Summit’s investor marketing materials, New
Summit wanted investors to enjoy great returns investing in the building of new homes without
the hassles of the construction process.  New Summit told investors their investments would be
backed and guaranteed by New Summit.
15. New Summit offered at least three investment opportunities: a Home Investment
Opportunity, a Realty Investment Opportunity, and a Note Investment Opportunity.  The three
investment opportunities were described in a written investment brochure.  Farish had authority
over the contents of the written investment brochure.
16. The written investment brochure stated that, in the Home Investment Opportunity,
the investor funded the development of  a “spec” home in exchange for a pre-determined return
when the home was sold.  The property was kept in the investor’s name as security for the
investment.
17. The written investment brochure stated that, in the Realty Investment
Opportunity, the investor contributed funds to New Summit’s affiliated marketing company in
exchange for the greater of a predetermined rate of return or a set percentage of the gross
commissions earned from the sale of New Summit homes.
18. The written investment brochure stated that, in the Note Investment Opportunity,
the investor helped fund a construction project by bridging the gap between the amount the bank
would lend and the full amount required for construction of a home in exchange for a pre-
determined return when the home was ultimately sold.  The brochure also stated that New
Summit provided the investor with the second-lien on the property as security for the investment.

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The written investment brochure touted the Note Investment Opportunity as an investment
offering great security with a good return that is excellent for self-directed retirement accounts.
B.  The Little Bluestem Offering
19. The Little Bluestem offering was a Note Investment Opportunity.  New Summit
identified a plot to build a high-end home on Little Bluestem Court in the gated Vaquero
community in Westlake, Texas.  In March 2016, the Little Bluestem lot was purchased on New
Summit’s behalf.  New Summit then offered a note investment to investors to fill the gap
between the amount the bank would approve for a construction loan and the additional amount
New Summit claimed it would need to build the home on the Little Bluestem property.
20. Beginning in March 2016, Farish marketed the Little Bluestem note investment to
multiple potential investors in different states, including two fellow airline pilots.  Farish handled
every stage of the investor solicitations, and was the sole point of communication between
investors and New Summit.  Farish drove potential investors to the Little Bluestem lot, described
how New Summit would use the investment to construct the home, and promised investors that if
they purchased the note investment they would hold the second lien on the property.  Farish
pitched the Little Bluestem investment as a safe way to generate even higher retirement income
than investors could earn in the stock market.
21. Ultimately, and contrary to his representations, Farish obtained three separate
investors to fill the same purported funding gap on Little Bluestem.
22. On or about May 23, 2016, Farish secured a $460,000 investment from a fellow
commercial airline pilot residing in Paradise, Arizona (“Investor 1”), who wired his investment
funds to a New Summit bank account.  At the time, Farish made multiple representations to
Investor 1 to induce him to invest.  Farish told Investor 1 that he would receive an investment

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COMPLAINT           Page 7
return of $200,000 after the home was sold, and he provided Investor 1 a written promissory note
stating this promised return.  Farish told Investor 1 that his investment funds would be used for
the Little Bluestem property, and he provided Investor 1 a written breakdown representing that
his funds would be used to cover the shortage between the bank loan and the cost of the building
project.  Farish told Investor 1 that he would have the second lien on the Little Bluestem
property, and he provided Investor 1 a Second Mortgage Deed of Trust, which was supposed to
document Investor 1’s second lien.  Farish promised Investor 1 that he we would record the
Second Mortgage Deed of Trust, but he did not.
23. Eight months later, the Little Bluestem lot remained undeveloped, and Defendants
had spent almost all of Investor 1’s $460,000 investment on personal items or expenses unrelated
to the project.
24. On or about January 19, 2017, Farish secured a $200,000 investment for the same
Little Bluestem project from a married couple residing in North Carolina and the wife’s elderly
mother who lives near Dallas (collectively, “Investor 2”).  Farish picked up the $200,000 check
payable to New Summit during his visit with the elderly mother, which he deposited in a New
Summit bank account.  Farish made multiple representations to Investor 2 to induce them to
invest.  Farish told Investor 2 that they would receive an investment return of $50,000 when the
home was built and sold, and he provided Investor 2 a written promissory note stating the
promised return, which Farish signed as “CEO New Summit Homes.”  Farish told Investor 2 that
their investment was going to be used for the development of Little Bluestem and that it was a
brand new project.  Farish represented to Investor 2 that they would have the second lien on the
property to secure their investment, and he provided Investor 2 a Second Mortgage Deed of Trust
nearly identical to the one he presented to Investor 1 to document the purported second lien.

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COMPLAINT           Page 8
This “second” Second Mortgage Deed of Trust was recorded, but only after Investor 2’s
insistence, and Farish did not tell Investor 2 about the existence of Investor 1 or the pre-existing
unrecorded second lien.
25. Six months later, Little Bluestem remained undeveloped despite the fact that
Defendants had raised $660,000 from Investor 1 and Investor 2 for the project.  Defendants
continued to spend the investment proceeds on personal items and other expenses unrelated to
the Little Bluestem project.
26. On or about June 27, 2017, Farish secured a third investor for the Little Bluestem
project.  Farish obtained $350,000 from another commercial airline pilot residing in Highland
Village, Texas (“Investor 3”), who wired his investment funds to a New Summit bank account.
At the time, Farish made similar false statements to Investor 3 as he did to the previous two
investors.  Farish provided Investor 3 with yet another promissory note to fill the same funding
gap that he again signed as “CEO New Summit Homes,” guaranteeing a $65,000 investment
return upon the sale of the home.  Farish told Investor 3 that his investment was funding the
construction of the Little Bluestem property, which Farish claimed would be breaking ground in
the next week.  Farish told Investor 3 that he would have the second lien on the property, and
Farish provided Investor 3 yet another Second Mortgage Deed of Trust nearly identical to the
ones provided to Investors 1 and 2.  Farish did not record the “third” Second Mortgage Deed of
Trust, which he promised Investor 3 he would do, nor did he tell Investor 3 about the previous
investors or their pre-existing second-lien interests.
27. Each of the notes offered and sold were investment contracts and thus securities.
The notes were entirely passive investments, and the investors had no role or say in the
operations or management of New Summit or the underlying real-estate project.  The investor

SEC v. Farish, et al.
COMPLAINT           Page 9
paid money to New Summit to purchase a note with a fixed investment return, and the investor
expected to receive profits from the investment based solely upon the efforts and expertise of
Farish and New Summit, including in the development and sale of the real-estate project.  The
investors’ primary interest and motivation for investing in the Little Bluestem project was the
profit the notes were promised and expected to generate.
C.  Defendants Misused and Misappropriated the Investor Funds
28. New Summit ultimately obtained over $1 million in investor funds from the three
investors for the construction of a home at Little Bluestem.  Yet, the property and lot remains
empty and undeveloped.
29. Farish and New Summit commingled the investors’ funds and the company’s
other funds in the same account.  Defendants then used substantially all of the commingled
investor funds for personal items and other expenses unrelated to the Little Bluestem project.
30. The funds in the commingled account were spent, by way of example, on personal
monthly mortgage and rent payments, personal retail, restaurant, and entertainment expenses
(e.g., iTunes, Guitar Center, clothing subscriptions), lavish family vacations (e.g., Disney cruise),
personal home remodeling costs, and a retainer for a criminal defense lawyer for one of Farish’s
sons arising from an incident in Waco, Texas involving two rival motorcycle gangs.
31. The New Summit bank account now has a near-zero balance.  Substantially all of
the investor funds raised for Little Bluestem have been misused or misappropriated.
32. Farish also took steps to lull the investors to facilitate Defendants’ misuse and
misappropriation of investor funds.  For example, after Investor 2 requested an update on the
status of his investment, Farish sent him an email on February 25, 2017, stating that “we are in
the process of grading the land” and then another email on March 26, 2017, stating that “we are

SEC v. Farish, et al.
COMPLAINT           Page 10
moving dirt now and ...we are now preparing the plot to begin the foundation.”  These
statements were false.  Farish made these statements, on information and belief, so that the
investors would believe their investment was on track and their investment funds were being
used for the project.  Further, Farish did not disclose that there had not been and would be no
development on the lot or that investor funds were being used for other purposes.
D.  Defendants Defrauded The Investors
33. In offering and selling the Little Bluestem investment notes, Defendants made
misstatements to investors, failed to disclose material facts that rendered statements made
misleading, and engaged in deceptive acts that operated as a fraud on the investors.
34. Farish, on behalf of New Summit, misrepresented to the investors verbally and in
writing that their investment funds would be used to build a high-end home on the Little
Bluestem property.  Farish made representations to investors about how New Summit would use
their investment funds, but failed to disclose that Defendants intended to use their funds on
personal expenses and other items unrelated to the Little Bluestem project.
35. These statements and omissions about the use of investor funds were false and
misleading, because Defendants used substantially all of the investor funds on personal expenses
and other items unrelated to the Little Bluestem project.  Farish knew these misstatements and
omissions about the use of funds were false and misleading, because he had knowledge of and
authority over the company’s spending, and because he personally misused and misappropriated,
and directed others to misuse and misappropriate, investor funds.
36. Farish, on behalf of New Summit, misrepresented to the investors verbally and in
writing that they would receive the second lien on the Little Bluestem property.   Farish made

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statements to investors about the security of their investment and their second lien, but failed to
disclose the existence of the other investors or the duplicate liens.
37. These statements and omissions about the security of the investment and the
second lien were false and misleading, because Defendants obtained three different investors for
the same property and promised three separate investors the same second lien.  Farish knew these
statements and omissions were false and misleading, because he offered and sold the duplicate
interest to the three investors with the same purported second lien, and he had authority over the
contents of the deceptive second lien documents used in furtherance of the scheme, which, upon
information and belief, Farish drafted.
38. Farish, on behalf of New Summit, told investors verbally and in writing that the
investors would receive sizeable returns on their investments.  Farish failed to disclose to
Investor 2 that there was an earlier investor or to Investor 3 that there were earlier investors
already invested in the project, or that there had been no development on the project despite the
earlier investments.  These omissions were false and misleading, because, as Farish knew, the
lack of progress increased the risk that the home would not be built and, even if it were built and
sold, the multiple investors increased the risk that any profit on the sale would not be sufficient
to provide investors with the promised returns.
39. Farish, in furtherance of the scheme, and to facilitate the misuse and
misappropriation of investor funds, misrepresented the status of the Little Bluestem project to the
investors, falsely leading them to believe work was being or about to be performed on the
property when it was not.  Farish knew his statements and omissions were false and misleading,
including because Farish controlled New Summit’s business, had knowledge of its finances, and
visited the Little Bluestem lot regularly.

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40. Farish also falsely represented to the investors that he was the CEO of New
Summit, and failed to disclose that he had no actual title at New Summit, or that, upon
information and belief, he was trying to separate New Summit from his legal troubles related to a
previous real-estate venture.  These misstatements and omissions were false and misleading,
because, as Farish knew, they falsely led investors to believe that Farish was an officer of the
company and they concealed his prior issues with investors.
41. Farish also deceptively used the credit and assistance of a friend and fellow airline
pilot in furtherance of the scheme.  Because Farish lacked the credit to obtain the first mortgage
for the Little Bluestem property, Farish paid the pilot a $20,000 fee to use his credit to obtain the
first mortgage and hold it for New Summit.  The pilot also signed or co-signed several of the
investment documents on behalf of New Summit, including two of the promissory notes, even
though, like Farish, he had no actual position at New Summit.
42. Defendants obtained money from investors by means of the misrepresentations
and omissions alleged above, much if not all of which, Farish spent, or directed others to spend,
for Defendants’ benefit.  Farish made the misrepresentations and omissions knowingly or with
severe recklessness, and his knowledge and state of mind is imputed to New Summit, an entity
he controlled.
43. The misstatements and omissions were material.  A reasonable investor would
have considered the misstatements and omissions about the use of their investment funds, their
security interest, the existence of other investors, the work performed on the project (or lack
thereof), and Farish’s position at New Summit important in deciding whether to invest.  The
investors would not have invested if they had known of the other investors with duplicate second

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COMPLAINT           Page 13
liens or that their investment funds would not be used to build a home on the Little Bluestem
property.
44. During the relevant period, Farish used New Summit as means of perpetrating the
securities fraud, and he and New Summit had a close relationship and closely collaborated in
connection with the violations of the securities laws alleged herein.  Farish was the de facto CEO
and de facto owner of New Summit, and he controlled all aspects of the company and its
finances, including the solicitation of investors and spending of investor funds.
45. New Summit did not adequately observe corporate formalities, including by
failing to keep adequate books and records, failing to designate Farish as an officer and director
of the company, and commingling funds and not separating the Farish family’s personal funds
from corporate funds.  Defendants spent the commingled funds as one economic unit.
46. On January 8, 2019, the U.S. Attorney’s Office for the Northern District of Texas
indicted Farish on one count of wire fraud relating to his conduct in connection with the Little
Bluestem project.
FIRST CLAIM FOR RELIEF
Violations of the Antifraud Provisions of the Securities Act
Section 17(a) of the Securities Act
(against all Defendants)

47. The SEC reallages and incorporates by reference each and every allegation
contained in the paragraphs above
48. By engaging in the conduct described herein, Defendants, directly or indirectly,
singly or in concert with others, in the offer or sale of securities, by use of the means and
instrumentalities of interstate commerce and/or by use of the mails have: (a) employed devices,
schemes, and artifices to defraud; and/or (b) obtained money or property by means of untrue

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COMPLAINT           Page 14
statements of a material fact and omitted to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not misleading;
and/or (c) engaged in transactions, practices, and courses of business which operate or would
operate as a fraud and deceit upon the purchasers.
49. With regard to Defendants’ violations of Section 17(a)(1) of the Securities Act,
Defendants acted with scienter and engaged in the referenced acts knowingly and/or with severe
recklessness.  With regard to Defendants’ violations of Sections 17(a)(2) and 17(a)(3) of the
Securities Act, Defendants acted at least negligently.
50. By reason of the foregoing, Defendants have violated and, unless enjoined, will
continue to violate, Section 17(a) of the Securities Act [15 U.S.C. § 77q].
SECOND CLAIM FOR RELIEF
Violations of the Antifraud Provisions of the Exchange Act
Section 10(b) of the Exchange Act and Rule 10b-5 thereunder
(against all Defendants)
51. The SEC reallages and incorporates by reference each and every allegation
contained in the paragraphs above.
52. By engaging in the conduct described herein, Defendants, directly or indirectly,
singly or in concert, by the use of the means or instrumentalities of interstate commerce and/or or
by use of the mails, in connection with the purchase or sale of securities: (a) employed devices,
schemes, and artifices to defraud; and/or (b) made untrue statements of a material fact and
omitted to state a material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading; and/or (c) engaged in acts,
practices, and courses of business which operate or would operate as a fraud and deceit upon
purchasers, prospective purchasers, and any other persons.

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53. Defendants acted with scienter and engaged in the referenced acts knowingly
and/or with severe recklessness.
54. By reason of the foregoing, Defendants violated and, unless enjoined, will
continue to violate Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5
thereunder [17 C.F.R. § 240.10b-5].
JURY TRIAL DEMAND
The SEC demands a trial by jury on all issues that may be so tried.
RELIEF REQUESTED
Therefore, the SEC respectfully requests that this Court:
(a) Permanently enjoin Defendants from violating, directly or indirectly,
Section 17(a) of the Securities Act [15 U.S.C. § 77q] and Section 10(b) of
the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17
C.F.R. § 240.10b-5];
(b) Order Defendants to disgorge, jointly and severally, all ill-gotten gains
and/or unjust enrichment realized by them, plus prejudgment interest
thereon;
(c) Order Defendants to each pay a civil penalty pursuant to Section 20(d) of
the Securities Act [15 U.S.C. § 77t(d)] and/or Section 21(d)(3) of the
Exchange Act [15 U.S.C. § 78u(d)(3)]; and

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(d) Grant such further relief as this Court may deem just and proper.
Dated: August 8, 2019    Respectfully submitted,

/s/ Keefe M. Bernstein___________
 Keefe M. Bernstein
            Lead            Attorney
                                                                                    Texas            Bar            No.            24006839
       James E. Etri
Texas Bar No. 24002061
       Rebecca R. Fike
                                                                                    Texas            Bar            No.            24065228
 Securities and Exchange Commission
                                                                                    801            Cherry            Street,            Suite            1900
                                                                                    Fort            Worth,            TX                        76102
(817) 900-2607 (phone)
(817) 978-4927 (facsimile)
[email protected]

Counsel for Plaintiff
Securities and Exchange Commission

UNITED STATES DISTRICT COURT 
NORTHERN DISTRICT OF TEXAS 

FORT WORTH DIVISION 
 
  
SECURITIES AND EXCHANGE COMMISSION,  
  

Plaintiff,  
 C.A. No.:  4:19-cv-623 

v.  
  
JERRY LEE FARISH, and 
NEW SUMMIT HOMES, INC. 

Jury Trial Demanded  

  
Defendants.  

  

 

COMPLAINT 

Plaintiff Securities and Exchange Commission (“SEC”) files this Complaint against 

Defendants Jerry Lee Farish (“Farish”) and New Summit Homes, Inc. (“New Summit”) 

(collectively, “Defendants”) and alleges as follows:  

SUMMARY OF THE ACTION 

1. Farish is a long-time commercial airline pilot for an international airline based in 

North Texas.  Between March 2016 and June 2017, Farish raised over $1 million from fellow 

pilots and other investors in a fraudulent securities offering for New Summit, a home-building 

company he controlled.   

2. Farish represented to the investors that New Summit would use their investment 

funds to build a high-end home on the “Little Bluestem” lot in Westlake, Texas, and that  

investors would receive their principal plus sizeable returns once the house was sold.  Farish also 

told each of the investors that their investment would be secured by the second lien on the 

property, subordinate only to a first mortgage held by a financial institution.  

                                                                                         
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3. In truth, Defendants sold the same investment to three different investors, 

purporting to provide all three investors with the same second lien position on the Little 

Bluestem property.  Further, Defendants did not use investor funds to build the home as 

promised.  Instead, Defendants commingled the investor funds in a New Summit bank account 

with funds from other sources, and then spent substantially all of the money on personal items 

and other expenses unrelated to the project, including entertainment and retail expenses, personal 

mortgage and rent payments, and lavish vacations.   

4. Despite raising more than $1 million for the Little Bluestem project, the lot and 

New Summit’s bank account are empty.  The investors received nothing from Defendants in 

return for their investments.   

5. By reason of this misconduct, Defendants violated, and unless enjoined will 

continue to violate, the antifraud provisions of the federal securities laws, specifically Section 

17(a) of the Securities Act of 1933 (the “Securities Act”) [15 U.S.C. § 77q] and Section 10(b) of 

the Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 

thereunder [17 C.F.R. § 240.10b-5].  The SEC brings this action seeking permanent injunctive 

relief, disgorgement of ill-gotten gains plus prejudgment interest, civil penalties, and all other 

equitable and ancillary relief the Court deems necessary. 

JURISDICTION AND VENUE 

6. This Court has jurisdiction over this action pursuant to Sections 20(b), 20(d), and 

22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v(a)] and Sections 21(d), 21(e), 

and 27(a) of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa(a)].  The investments 

offered, purchased, and sold as alleged herein were securities as defined under the Securities Act 

                                                                                         
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and the Exchange Act.   Defendants directly or indirectly made use of the means or 

instrumentalities of interstate commerce or the mails in connection with the transactions, acts, 

practices, and courses of business alleged herein.  

7. Venue is proper in this district pursuant to Section 22(a) of the Securities Act [15 

U.S.C. § 77v(a)] and Section 27(a) of the Exchange Act [15 U.S.C. § 78aa(a)].  Certain of the 

transactions, acts, practices, and courses of business constituting violations of the federal 

securities laws occurred within this district.  Defendants offered and sold securities at issue in 

this district and the real property related to the investment is located in Westlake, Tarrant 

County, Texas, which is in this district.  Further, Farish resides in this district and New Summit’s 

principal place of business is in this district.  

DEFENDANTS 

8. Defendant Farish is an individual who resides in Tarrant County, Texas.  During 

the relevant time period, Farish managed and controlled New Summit and was its de facto owner 

and Chief Executive Officer (“CEO”).  During the SEC’s investigation preceding the filing of 

this Complaint, Farish asserted his Fifth Amendment privilege against self-incrimination and 

refused to testify.  On January 8, 2019, the U.S. Attorney’s Office for the Northern District of 

Texas indicted Farish on one count of wire fraud relating to his conduct in connection with the 

Little Bluestem project.  

9. Defendant New Summit is a Texas corporation with its principal place of business 

in Tarrant County, Texas.  On January 25, 2019, the Texas Secretary of State forfeited New 

Summit’s charter.  On information and belief, New Summit has no current operations. 

  

                                                                                         
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FACTUAL ALLEGATIONS 
 

A. Background     

10. Farish has been a licensed commercial airline pilot for a North Texas-based 

international airline for approximately thirty years.  During his career as a pilot, Farish has also 

been involved in a number of real estate side businesses. 

11. Farish started New Summit in late 2014.  The Secretary of State filings for New 

Summit list Farish’s three sons as the company’s owners, officers, and directors.  On information 

and belief, Farish excluded his name from the Secretary of State filings in an effort to separate 

New Summit from his legal problems related to a prior real-estate venture.   

12. Farish’s sons, however, lacked any business education or experience and 

exercised little-to-no independent judgment or decision-making at New Summit.  Farish was 

New Summit’s de facto owner and CEO, and he controlled every aspect of the company, 

including how it spent money.  Farish held himself out as New Summit’s CEO, and Farish was 

also the one who solicited investors and communicated directly with investors about their 

investments.   

13. New Summit operated in two ways: first, building homes directly for the 

individuals who planned to live in them; and, second, securing investors to provide capital for 

New Summit to build and then sell new homes for a profit.  In fact, New Summit did build and 

sell a number of homes over the approximately two years it was in operation, particularly for 

people in the first group who planned to live in them.  Farish, however, used New Summit as a 

vehicle to defraud investors and misappropriate funds from investors in the second group who 

invested in New Summit projects for a profit.   

                                                                                         
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14. To raise funds from these investors, Farish targeted fellow airline pilots with large 

balances in their 401(k) accounts, extolling the benefits of creating a self-directed IRA to invest 

in New Summit projects.  According to New Summit’s investor marketing materials, New 

Summit wanted investors to enjoy great returns investing in the building of new homes without 

the hassles of the construction process.  New Summit told investors their investments would be 

backed and guaranteed by New Summit.   

15. New Summit offered at least three investment opportunities: a Home Investment 

Opportunity, a Realty Investment Opportunity, and a Note Investment Opportunity.  The three 

investment opportunities were described in a written investment brochure.  Farish had authority 

over the contents of the written investment brochure.    

16. The written investment brochure stated that, in the Home Investment Opportunity, 

the investor funded the development of  a “spec” home in exchange for a pre-determined return 

when the home was sold.  The property was kept in the investor’s name as security for the 

investment.   

17. The written investment brochure stated that, in the Realty Investment 

Opportunity, the investor contributed funds to New Summit’s affiliated marketing company in 

exchange for the greater of a predetermined rate of return or a set percentage of the gross 

commissions earned from the sale of New Summit homes.  

18. The written investment brochure stated that, in the Note Investment Opportunity, 

the investor helped fund a construction project by bridging the gap between the amount the bank 

would lend and the full amount required for construction of a home in exchange for a pre-

determined return when the home was ultimately sold.  The brochure also stated that New 

Summit provided the investor with the second-lien on the property as security for the investment.  

                                                                                         
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The written investment brochure touted the Note Investment Opportunity as an investment 

offering great security with a good return that is excellent for self-directed retirement accounts. 

B. The Little Bluestem Offering    

19. The Little Bluestem offering was a Note Investment Opportunity.  New Summit 

identified a plot to build a high-end home on Little Bluestem Court in the gated Vaquero 

community in Westlake, Texas.  In March 2016, the Little Bluestem lot was purchased on New 

Summit’s behalf.  New Summit then offered a note investment to investors to fill the gap 

between the amount the bank would approve for a construction loan and the additional amount 

New Summit claimed it would need to build the home on the Little Bluestem property.   

20. Beginning in March 2016, Farish marketed the Little Bluestem note investment to 

multiple potential investors in different states, including two fellow airline pilots.  Farish handled 

every stage of the investor solicitations, and was the sole point of communication between 

investors and New Summit.  Farish drove potential investors to the Little Bluestem lot, described 

how New Summit would use the investment to construct the home, and promised investors that if 

they purchased the note investment they would hold the second lien on the property.  Farish 

pitched the Little Bluestem investment as a safe way to generate even higher retirement income 

than investors could earn in the stock market.       

21. Ultimately, and contrary to his representations, Farish obtained three separate 

investors to fill the same purported funding gap on Little Bluestem.   

22. On or about May 23, 2016, Farish secured a $460,000 investment from a fellow 

commercial airline pilot residing in Paradise, Arizona (“Investor 1”), who wired his investment 

funds to a New Summit bank account.  At the time, Farish made multiple representations to 

Investor 1 to induce him to invest.  Farish told Investor 1 that he would receive an investment 

                                                                                         
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return of $200,000 after the home was sold, and he provided Investor 1 a written promissory note 

stating this promised return.  Farish told Investor 1 that his investment funds would be used for 

the Little Bluestem property, and he provided Investor 1 a written breakdown representing that 

his funds would be used to cover the shortage between the bank loan and the cost of the building 

project.  Farish told Investor 1 that he would have the second lien on the Little Bluestem 

property, and he provided Investor 1 a Second Mortgage Deed of Trust, which was supposed to 

document Investor 1’s second lien.  Farish promised Investor 1 that he we would record the 

Second Mortgage Deed of Trust, but he did not.     

23. Eight months later, the Little Bluestem lot remained undeveloped, and Defendants 

had spent almost all of Investor 1’s $460,000 investment on personal items or expenses unrelated 

to the project. 

24. On or about January 19, 2017, Farish secured a $200,000 investment for the same 

Little Bluestem project from a married couple residing in North Carolina and the wife’s elderly 

mother who lives near Dallas (collectively, “Investor 2”).  Farish picked up the $200,000 check 

payable to New Summit during his visit with the elderly mother, which he deposited in a New 

Summit bank account.  Farish made multiple representations to Investor 2 to induce them to 

invest.  Farish told Investor 2 that they would receive an investment return of $50,000 when the 

home was built and sold, and he provided Investor 2 a written promissory note stating the 

promised return, which Farish signed as “CEO New Summit Homes.”  Farish told Investor 2 that 

their investment was going to be used for the development of Little Bluestem and that it was a 

brand new project.  Farish represented to Investor 2 that they would have the second lien on the 

property to secure their investment, and he provided Investor 2 a Second Mortgage Deed of Trust 

nearly identical to the one he presented to Investor 1 to document the purported second lien.  

                                                                                         
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This “second” Second Mortgage Deed of Trust was recorded, but only after Investor 2’s 

insistence, and Farish did not tell Investor 2 about the existence of Investor 1 or the pre-existing 

unrecorded second lien.   

25. Six months later, Little Bluestem remained undeveloped despite the fact that 

Defendants had raised $660,000 from Investor 1 and Investor 2 for the project.  Defendants 

continued to spend the investment proceeds on personal items and other expenses unrelated to 

the Little Bluestem project. 

26. On or about June 27, 2017, Farish secured a third investor for the Little Bluestem 

project.  Farish obtained $350,000 from another commercial airline pilot residing in Highland 

Village, Texas (“Investor 3”), who wired his investment funds to a New Summit bank account.  

At the time, Farish made similar false statements to Investor 3 as he did to the previous two 

investors.  Farish provided Investor 3 with yet another promissory note to fill the same funding 

gap that he again signed as “CEO New Summit Homes,” guaranteeing a $65,000 investment 

return upon the sale of the home.  Farish told Investor 3 that his investment was funding the 

construction of the Little Bluestem property, which Farish claimed would be breaking ground in 

the next week.  Farish told Investor 3 that he would have the second lien on the property, and 

Farish provided Investor 3 yet another Second Mortgage Deed of Trust nearly identical to the 

ones provided to Investors 1 and 2.  Farish did not record the “third” Second Mortgage Deed of 

Trust, which he promised Investor 3 he would do, nor did he tell Investor 3 about the previous 

investors or their pre-existing second-lien interests.   

27. Each of the notes offered and sold were investment contracts and thus securities.  

The notes were entirely passive investments, and the investors had no role or say in the 

operations or management of New Summit or the underlying real-estate project.  The investor 

                                                                                         
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paid money to New Summit to purchase a note with a fixed investment return, and the investor 

expected to receive profits from the investment based solely upon the efforts and expertise of 

Farish and New Summit, including in the development and sale of the real-estate project.  The 

investors’ primary interest and motivation for investing in the Little Bluestem project was the 

profit the notes were promised and expected to generate. 

C. Defendants Misused and Misappropriated the Investor Funds   

28. New Summit ultimately obtained over $1 million in investor funds from the three 

investors for the construction of a home at Little Bluestem.  Yet, the property and lot remains 

empty and undeveloped.   

29. Farish and New Summit commingled the investors’ funds and the company’s 

other funds in the same account.  Defendants then used substantially all of the commingled 

investor funds for personal items and other expenses unrelated to the Little Bluestem project.   

30. The funds in the commingled account were spent, by way of example, on personal 

monthly mortgage and rent payments, personal retail, restaurant, and entertainment expenses 

(e.g., iTunes, Guitar Center, clothing subscriptions), lavish family vacations (e.g., Disney cruise), 

personal home remodeling costs, and a retainer for a criminal defense lawyer for one of Farish’s 

sons arising from an incident in Waco, Texas involving two rival motorcycle gangs.  

31. The New Summit bank account now has a near-zero balance.  Substantially all of 

the investor funds raised for Little Bluestem have been misused or misappropriated. 

32. Farish also took steps to lull the investors to facilitate Defendants’ misuse and 

misappropriation of investor funds.  For example, after Investor 2 requested an update on the 

status of his investment, Farish sent him an email on February 25, 2017, stating that “we are in 

the process of grading the land” and then another email on March 26, 2017, stating that “we are 

                                                                                         
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moving dirt now and …we are now preparing the plot to begin the foundation.”  These 

statements were false.  Farish made these statements, on information and belief, so that the 

investors would believe their investment was on track and their investment funds were being 

used for the project.  Further, Farish did not disclose that there had not been and would be no 

development on the lot or that investor funds were being used for other purposes. 

D.  Defendants Defrauded The Investors       

33. In offering and selling the Little Bluestem investment notes, Defendants made 

misstatements to investors, failed to disclose material facts that rendered statements made 

misleading, and engaged in deceptive acts that operated as a fraud on the investors.  

34. Farish, on behalf of New Summit, misrepresented to the investors verbally and in 

writing that their investment funds would be used to build a high-end home on the Little 

Bluestem property.  Farish made representations to investors about how New Summit would use 

their investment funds, but failed to disclose that Defendants intended to use their funds on 

personal expenses and other items unrelated to the Little Bluestem project.      

35. These statements and omissions about the use of investor funds were false and 

misleading, because Defendants used substantially all of the investor funds on personal expenses 

and other items unrelated to the Little Bluestem project.  Farish knew these misstatements and 

omissions about the use of funds were false and misleading, because he had knowledge of and 

authority over the company’s spending, and because he personally misused and misappropriated, 

and directed others to misuse and misappropriate, investor funds.    

36. Farish, on behalf of New Summit, misrepresented to the investors verbally and in 

writing that they would receive the second lien on the Little Bluestem property.   Farish made 

                                                                                         
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statements to investors about the security of their investment and their second lien, but failed to 

disclose the existence of the other investors or the duplicate liens.  

37. These statements and omissions about the security of the investment and the 

second lien were false and misleading, because Defendants obtained three different investors for 

the same property and promised three separate investors the same second lien.  Farish knew these 

statements and omissions were false and misleading, because he offered and sold the duplicate 

interest to the three investors with the same purported second lien, and he had authority over the 

contents of the deceptive second lien documents used in furtherance of the scheme, which, upon 

information and belief, Farish drafted. 

38. Farish, on behalf of New Summit, told investors verbally and in writing that the 

investors would receive sizeable returns on their investments.  Farish failed to disclose to 

Investor 2 that there was an earlier investor or to Investor 3 that there were earlier investors 

already invested in the project, or that there had been no development on the project despite the 

earlier investments.  These omissions were false and misleading, because, as Farish knew, the 

lack of progress increased the risk that the home would not be built and, even if it were built and 

sold, the multiple investors increased the risk that any profit on the sale would not be sufficient 

to provide investors with the promised returns. 

39. Farish, in furtherance of the scheme, and to facilitate the misuse and 

misappropriation of investor funds, misrepresented the status of the Little Bluestem project to the 

investors, falsely leading them to believe work was being or about to be performed on the 

property when it was not.  Farish knew his statements and omissions were false and misleading, 

including because Farish controlled New Summit’s business, had knowledge of its finances, and 

visited the Little Bluestem lot regularly. 

                                                                                         
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40. Farish also falsely represented to the investors that he was the CEO of New 

Summit, and failed to disclose that he had no actual title at New Summit, or that, upon 

information and belief, he was trying to separate New Summit from his legal troubles related to a 

previous real-estate venture.  These misstatements and omissions were false and misleading, 

because, as Farish knew, they falsely led investors to believe that Farish was an officer of the 

company and they concealed his prior issues with investors. 

41. Farish also deceptively used the credit and assistance of a friend and fellow airline 

pilot in furtherance of the scheme.  Because Farish lacked the credit to obtain the first mortgage 

for the Little Bluestem property, Farish paid the pilot a $20,000 fee to use his credit to obtain the 

first mortgage and hold it for New Summit.  The pilot also signed or co-signed several of the 

investment documents on behalf of New Summit, including two of the promissory notes, even 

though, like Farish, he had no actual position at New Summit. 

42. Defendants obtained money from investors by means of the misrepresentations 

and omissions alleged above, much if not all of which, Farish spent, or directed others to spend, 

for Defendants’ benefit.  Farish made the misrepresentations and omissions knowingly or with 

severe recklessness, and his knowledge and state of mind is imputed to New Summit, an entity 

he controlled.   

43. The misstatements and omissions were material.  A reasonable investor would 

have considered the misstatements and omissions about the use of their investment funds, their 

security interest, the existence of other investors, the work performed on the project (or lack 

thereof), and Farish’s position at New Summit important in deciding whether to invest.  The 

investors would not have invested if they had known of the other investors with duplicate second 

                                                                                         
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liens or that their investment funds would not be used to build a home on the Little Bluestem 

property.       

44. During the relevant period, Farish used New Summit as means of perpetrating the 

securities fraud, and he and New Summit had a close relationship and closely collaborated in 

connection with the violations of the securities laws alleged herein.  Farish was the de facto CEO 

and de facto owner of New Summit, and he controlled all aspects of the company and its 

finances, including the solicitation of investors and spending of investor funds.   

45. New Summit did not adequately observe corporate formalities, including by 

failing to keep adequate books and records, failing to designate Farish as an officer and director 

of the company, and commingling funds and not separating the Farish family’s personal funds 

from corporate funds.  Defendants spent the commingled funds as one economic unit.   

46. On January 8, 2019, the U.S. Attorney’s Office for the Northern District of Texas 

indicted Farish on one count of wire fraud relating to his conduct in connection with the Little 

Bluestem project.   

FIRST CLAIM FOR RELIEF 

Violations of the Antifraud Provisions of the Securities Act 
Section 17(a) of the Securities Act 

(against all Defendants) 
 

47. The SEC reallages and incorporates by reference each and every allegation 

contained in the paragraphs above 

48. By engaging in the conduct described herein, Defendants, directly or indirectly, 

singly or in concert with others, in the offer or sale of securities, by use of the means and 

instrumentalities of interstate commerce and/or by use of the mails have: (a) employed devices, 

schemes, and artifices to defraud; and/or (b) obtained money or property by means of untrue 

                                                                                         
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statements of a material fact and omitted to state a material fact necessary in order to make the 

statements made, in light of the circumstances under which they were made, not misleading; 

and/or (c) engaged in transactions, practices, and courses of business which operate or would 

operate as a fraud and deceit upon the purchasers. 

49. With regard to Defendants’ violations of Section 17(a)(1) of the Securities Act, 

Defendants acted with scienter and engaged in the referenced acts knowingly and/or with severe 

recklessness.  With regard to Defendants’ violations of Sections 17(a)(2) and 17(a)(3) of the 

Securities Act, Defendants acted at least negligently.    

50. By reason of the foregoing, Defendants have violated and, unless enjoined, will 

continue to violate, Section 17(a) of the Securities Act [15 U.S.C. § 77q]. 

SECOND CLAIM FOR RELIEF 

Violations of the Antifraud Provisions of the Exchange Act 
Section 10(b) of the Exchange Act and Rule 10b-5 thereunder 

(against all Defendants) 

51. The SEC reallages and incorporates by reference each and every allegation 

contained in the paragraphs above. 

52. By engaging in the conduct described herein, Defendants, directly or indirectly, 

singly or in concert, by the use of the means or instrumentalities of interstate commerce and/or or 

by use of the mails, in connection with the purchase or sale of securities: (a) employed devices, 

schemes, and artifices to defraud; and/or (b) made untrue statements of a material fact and 

omitted to state a material fact necessary in order to make the statements made, in light of the 

circumstances under which they were made, not misleading; and/or (c) engaged in acts, 

practices, and courses of business which operate or would operate as a fraud and deceit upon 

purchasers, prospective purchasers, and any other persons. 

                                                                                         
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53. Defendants acted with scienter and engaged in the referenced acts knowingly 

and/or with severe recklessness.   

54. By reason of the foregoing, Defendants violated and, unless enjoined, will 

continue to violate Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 

thereunder [17 C.F.R. § 240.10b-5]. 

JURY TRIAL DEMAND 

The SEC demands a trial by jury on all issues that may be so tried. 

RELIEF REQUESTED 

Therefore, the SEC respectfully requests that this Court: 

(a) Permanently enjoin Defendants from violating, directly or indirectly, 

Section 17(a) of the Securities Act [15 U.S.C. § 77q] and Section 10(b) of 

the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 

C.F.R. § 240.10b-5]; 

(b) Order Defendants to disgorge, jointly and severally, all ill-gotten gains 

and/or unjust enrichment realized by them, plus prejudgment interest 

thereon; 

(c) Order Defendants to each pay a civil penalty pursuant to Section 20(d) of 

the Securities Act [15 U.S.C. § 77t(d)] and/or Section 21(d)(3) of the 

Exchange Act [15 U.S.C. § 78u(d)(3)]; and 

  

                                                                                         
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(d) Grant such further relief as this Court may deem just and proper. 

Dated: August 8, 2019    Respectfully submitted, 
 

/s/ Keefe M. Bernstein___________ 
 Keefe M. Bernstein 
 Lead Attorney   

       Texas Bar No. 24006839 
       James E. Etri 

Texas Bar No. 24002061 
       Rebecca R. Fike 
       Texas Bar No. 24065228 
 Securities and Exchange Commission  
       801 Cherry Street, Suite 1900 
       Fort Worth, TX  76102  

(817) 900-2607 (phone)  
(817) 978-4927 (facsimile) 
[email protected] 

        
Counsel for Plaintiff  
Securities and Exchange Commission

                                                                                         
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