The Securities and Exchange Commission filed a civil suit on June 23 in the U.S. District Court for the Western District of Texas against Sanders Family Office and its sole proprietor, Margaret Sanders. The complaint accuses the firm of selling roughly $40 million in promissory notes issued by Wells Real Estate Investment without being registered as a broker-dealer or affiliated with one.
According to the SEC's filing, from August 2020 through March 2023, the defendants marketed the notes to approximately 600 investors. The pitch was straightforward: proceeds would be used to acquire and renovate income-generating properties in South Florida, with the investments backed by real estate. The SEC alleges that the firm and its owner were not authorized to sell Wells's securities, yet they did so anyway, raising the bulk of the capital that Wells obtained.
The complaint details that the defendants received at least $2,977,099.53 in transaction-based commissions for their sales efforts. Such compensation tied directly to individual sales is a classic indicator of broker activity, the SEC noted. The firm also facilitated the rollover of investors' 401(k) and other retirement accounts into self-directed IRAs, enabling them to purchase the notes. The owner and her agents guided investors through the process, according to the filing.
Wells Real Estate Investment itself is described in the complaint as "a fraudulent scheme through and through." The SEC alleges that Wells made "Ponzi-like payments with new investor funds to older investors," concealed that its properties were already heavily mortgaged, and diverted money to its CEO and her husband for personal use. Wells raised at least $56 million from about 660 investors before collapsing in August 2024.
The Sanders defendants are not accused of running Wells. Instead, the SEC portrays them as the sales operation—recruiting, training, and supervising agents who marketed the notes. The complaint says Margaret Sanders held regular Zoom meetings, touted property values, and fielded questions about interest payments, which ranged from 10% to 12% annually on some notes.
The SEC brings two claims: selling unregistered securities in violation of Section 5 of the Securities Act of 1933, and acting as an unregistered broker-dealer in violation of Section 15(a) of the Securities Exchange Act of 1934. The regulator seeks permanent injunctions, disgorgement of the commissions, and civil penalties.
This case echoes other recent SEC actions involving promissory notes. In a similar matter, Oregon investors alleged Norada Capital hid a Ponzi scheme in promissory notes, highlighting the regulator's focus on unregistered offerings. The takeaway for advisors is clear: a "family office" label offers no regulatory shield. Soliciting investors, promoting a product's merits, and collecting per-deal compensation can lead the SEC to treat an entity as a broker—registered or not.
