The Securities and Exchange Commission (SEC) has charged Bettor Investments, formerly of Reno, Nevada, and its Managing Member and sole employee, Matthew C Stuart, with the fraudulent and unregistered offer and sale of interests in a sports betting venture.

According to the SEC’s complaint, beginning in March 2016, the defendants raised a total of approximately $145,500 from roughly 70 investors across the US by selling the sports betting interests without SEC registration or an applicable exemption. 

In addition, the SEC alleges that, in late 2016 and early 2017, Bettor and Stuart refunded some of the investors’ money and converted the remaining investors’ funds into promissory notes with supposedly “guaranteed” rates of return. 

In so doing, the complaint alleges, the defendants misrepresented to investors numerous significant facts, including the losses Bettor and Stuart had already incurred, how those losses would be apportioned among investors, the current value of the investments, the risks associated with the investments, Stuart’s compensation, and the use of investor funds. 

According to the complaint, Bettor and Stuart knew at the time that they had lost a significant portion of their investors’ assets and, given the limited funds available for wagering, could not reasonably expect to have the funds necessary to satisfy their promissory note obligations to investors upon maturity.

The SEC’s complaint, filed in federal district court in Las Vegas, Nevada, charges Bettor and Stuart with violations of the registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933 (“Securities Act”), and the antifraud provisions of Section 17(a)(2) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5(b) thereunder.

The SEC’s investigation was conducted by William Dixon and was supervised by Natalie Brunson of the Atlanta Regional Office. The litigation will be led by Robert F. Schroeder, under the supervision of Graham Loomis.