Jerry Lee Farish and New Summit Homes, Inc.

On August 8, 2019, the Securities and Exchange Commission charged North Texas-based New Summit Homes, Inc. (“NSH”) and its de facto Chief Executive Officer, Jerry Lee Farish, with running a fraudulent home building scheme.

According to the SEC’s complaint, Farish, a long-time commercial airline pilot, raised over $1 million from March 2016 to June 2017 by selling investments in a NSH real estate project to build and sell a high-end home on an empty lot in Westlake, Texas. Farish allegedly targeted fellow commercial airline pilots with large 401(k) accounts, and convinced them to invest their funds in the NSH real-estate investment opportunity, which was purportedly secured by a second lien on the property. As alleged in the SEC’s compliant, Farish fraudulently misrepresented to investors the nature of the investment and how NSH would spend the investment funds. In fact, Farish allegedly sold the same investment on three different occasions and purported to grant three separate investors the same “second lien.” The complaint further alleges that Farish and NSH did not use investor funds to build the home as promised and instead commingled investor funds in a NSH bank account with other funds, which Farish used to pay personal items, including Disney cruises, entertainment and retail expenses, and a retainer for a criminal defense lawyer for one of Farish’s sons. Despite raising more than $1 million for this single project, the real estate lot and the NSH bank account are empty today.

The SEC’s complaint, filed in the U.S. District Court for the Northern District of Texas, charges Farish and NSH with violating the antifraud provisions 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. The complaint seeks permanent injunctions, disgorgement plus prejudgment interest, and civil penalties. In a related criminal proceeding, the U.S. Attorney’s Office for the Northern District of Texas indicted Farish on one count of wire fraud on January 8, 2019, and his criminal trial is currently scheduled for October 21, 2019.

The SEC’s investigation was conducted by Rebecca Fike and supervised by Jim Etri of the Fort Worth Regional Office. The SEC’s litigation will be led by Keefe Bernstein, Ms. Fike and Mr. Etri, and supervised by B. David Fraser. The SEC appreciates the assistance of the Federal Bureau of Investigation – Dallas and the U.S. Attorney’s Office for the Northern District of Texas.