Commission Files Action Centered  on $1 Billion Offering Fraud

Offering fraud actions are a central focus for SEC Enforcement as we have repeatedly stated. While how much money is involved in the case is not a central focus, it is important.  In the Commission’s most recent offering fraud action that may be true.  The case involved $1 billion dollars and was underseal until Monday of this week.  SEC v. Feingold, Civil Action No. 1:25-cv-20436 (S.D. Fla. Filed underseal January 30, 2025).

Named as defendants are: David J. Feingold, CEO of BSI and control person over that entity and BSG Management; Joseph B. Baldassarra, managing member of BSG Management; Steven S. Baldassarra, also a managing member of BSG Management; Broad Street Global Management LLC; and Broad Street Inc., whose shares are owned equally by Baldassarra and Feingold and by three others.

BSG Fund is divided into numerous Series. BSG Management is the investment adviser to the Fund. It offers Series in Real Estate Infrastructure among other things.  Each Series is supposed to present an investor with a unique opportunity. Defendants engaged in a multi-faceted fraud related to BSG Fund.

First, Defendants fraudulently offered and paid inflated returns to investors tied to two Series. As a result, Defendants paid millions of dollars in returns to investors that were not supported by actual profits.

Second, Defendants managed the Fund in a manner that is inconsistent with the representations made to investors and which increased risk. Investors were told that the Series would own investments made with investor funds and that each would be separate.  In fact, they were comingled.

Third, a series of false statements were made to induce investors to put their money into the Fund.  For example, investors were promised that a series would generate tax-free returns.  In fact, it did not. Investors were also informed about the bookkeeping and record practices but those described were not used. Investors were also provided with false information about profitability.

Defendants engaged in other deceptive conduct and, in addition, disregarded their fiduciary duties to the clients. Those included the duty of utmost good faith and the obligation to disclose all material facts. From the over $1 billion raised by Defendants, the Baldassarras have transferred about $880 million to BSG Management. From those funds Defendants Fiengold and the Baldassarras have transferred about $170 million to the Baldassarras and two entities under their control or that of Defendant Feingold.

The complaint alleges violations of Securities Act Section 17(a), Exchange Act Section 10(b) and Rule 10b-5 and Section 20(a).  In addition, the four relief defendants have received substantial proceeds from the fraudulent conduct of Defendants. See  Lit. Rel. No. 26366 (August 4, 2025).