Massachusetts Securities Division v. Jose Encarnacion - Securities Fraud

1 COMMONWEA LTH OF MASSAC HUSETTS OFFICE OF THE SECR ETARY OF THE COMM ONWEALTH SECURIT IES DI VISION ONE ASHB URTON PLACE, RO OM 17 01 BOSTO N, MASSACHUSE TTS 02 108) IN THE MATTER OF:)) JOSE E NCARNACION) AND TRINITY ES TATE INVESTMENT S &) DEVELOPMENT LLC,)) RESPONDENTS.) Docket No. E-2025-0187) ADMINISTRATI VE COMPLAINT I. PRELIMINARY S TATEMENT The En forcemen t Sectio n of the S ecurit ies Div ision o f the Office o f the S ecret ar y of the Commonwealth of Massachusetts (the “Division”) files this ad minis trativ e co mplaint (the “Comp laint”) to commen ce an adjudicator y proceeding against J ose Encarnacion (“Encarna c ion”) a nd Trinity Estat e Investments and Developm ent LL C d/b/a Trin ity Real Estate I nvestment Group (“Trinit y Investments ”) (collectively “Responden ts”) for violati ons of the Massachuse tts Uniform Securities Act, M.G. L. c. 110A (the “Act”), and the regulations promulgated thereunder at 950 C MR 10.00-14.413 (the “Regulation s”). T he Division alleges that Respondents engaged in acts and prac tices in violation of Sections 101, 201, and 301 of th e Act b y fraudulentl y misrepresenting the purpose and use of unregist ere d and non- e xempt securities o ffer ed fro m and sold in Massachusetts. The Division seeks an order: (1) finding as fact all allegations set forth in Sec tions IV through VI of this Com plaint; (2) c oncluding that Resp ondents viola ted the Act and the Regula tio ns as al leged in Sec tion VII of this Complaint; (3) finding that all of the sanction s

2 and remedies detail ed herein are necessary or appropriate in the public interest or for the protection of investors a nd consisten t with the purposes fa irly intended by the policy and provisions of the A ct; (4) requiring Resp ondents to per manently cea se and desist fro m furthe r acts and p ractices in violati on of the Act an d Regulations; (5) imposi ng an administra tive fine on Respondent s in such amount and upon such t erms and conditions as the Direct or or Presiding Of ficer may determine; (6) requ iring Respondents to provide a verified accounting of the use of all fu nds received from investors; (7) r equiring Respondents t o make re scission offers, incl uding intere st, to all i nvestors in connect ion with the wrongdoing; (8) censuring Respondents; (9) permanentl y ba rring Respondent s from r egistering in Massa chusetts as, associa ting or affilia ting with, o r acting as a (n) broker - dealer, brok er - deal er a gent, investment adviser, investm ent advis er repr esent ative, S ecurit ies and Ex change Commission - register ed invest ment ad viser, an in vestm ent advi ser exem pted fro m registration, a person rely i ng on an exclusion from the definition of investment adviser or broker- dealer i n an y cap acit y, issu er, issu er - a gent, or as a partner, officer, director, or control person of any of the foreg oing; (1 0) pe rmanently barring Responde nts fro m offering or selling se curities from or within Massachuset ts, and to perso ns in Massac hus etts; an d (1 1) taking an y su ch fur ther actions that may be neces sary or appropriate in the public interest or for the protection of investors. II. SUMM ARY On March 14, 2020, Encarn acio n forme d Trin ity Investments, a Massach usett s limited lia bility company, to purch ase, sell, and develo p real est ate. Beginning in June 2020, Encarnacion, throu gh Trin it y Inve stments, solicite d i nvestments both n ationwide and internationally. Encarnacion ra ised funds p rimarily f rom immigr ant communities, a

3 substantial portion c oming from the Centra l African commun ity. While soliciting investments, Encarnacion leverage d his position as Senior Pastor of Igle sia Cristiana De La Comunidad in Worcester, a church he operates, to raise funds. Encarnacion told investors that the funds the invested would be used to develop and renovate r eal est ate alrea dy owned by Trinity Investments. Encarnacion told investors that, through Trinity I nvestments, he would generate revenue f rom r ental i ncom e or th e sale of properties, and that he would use this revenue to pay interest and return principal to investors. Respondents raised a pproximately $10 million from investors since 2020 — including over $2 million from Massachusetts investors alone. In reality, Encarnacion used only a portion of the funds he raised to develop or renovate properties. Instead, while Trinity Investments fell further a nd further behind on the interest it owed to investors, Enc arnacion continued to reach out to new investors. In doing so, Encarnacion took advantage of a network of aff iliated religiou s institutions using his reputation as a pastor in an attempt to attrac t new investments. Throughout the scheme, Encarn acion us ed n ew investor ’s funds to pay earlier investors, pa y for personal travel both domestica lly and inter nation ally, and spent f unds on personal expenses including bu yin g jewelr y and atten ding co ncerts.

4 For example, in June 20 22, Encarnacion represented to one investor that Trinit y Investments would use their funds to renovate a prope rty in Southbridge, Massachu setts, and the y invested $60,000. In June 2023 Trinity Investments sold the Southbridge propert y for $220,000, receiving proceeds of $95,047.61. Encarnacion did not repa y the investor from the proceeds of the home renovation project. Instead Encarnacion pa id t hose funds to prior investors, mad e payments on mortgage s for other properties, and pa id personal expen ses. Neither Trinity Investments nor Encarnacion took an y steps to register themselves as broker - dealers, bro ker - dealer a gents, investment advisers, investment adviser repres entativ es, or i ssuer agen ts in Massachu setts or elsewh ere. Furthermore, Respondents did not registe r th e promissory notes, or seek an ex emption from registering their notes.

5 The Enforcement Section files this Complaint to prevent R espondents from continuing their fraud at the ex pense of investors, and to seek the return of an y recoverable assets to defrauded investors. III. JURISDICTI ON AND AUTH ORITY 1. The Division has jurisdiction over matters relating to securities pursuant to the Act and Regulations. 2. The Division brings this action pursuant to t he authorit y granted by Sections 407A, 412, and 414 of the Act, wherein the Division has the authorit y to conduct an adjudicatory proceeding to enforce the provisions of the Act and the Regulations. 3. The Division files this Complaint in accordance with Section 10.06 of the Regulations. 4. The Division’s investigation is current and ongoing and may result in the filing of additional a dministrative complain ts. I V. RELEVANT TI ME PER IOD 5. Excep t as oth erwis e exp ressl y stated, the a cts and pra ctices des cribed herei n occurred during the approx imate time period of June 1, 2020, to the date of this Complaint (the “Rel evant Time P eriod”). V. RESPONDENT S 6. Trinity Estate In vestment s & Development, LLC d/b/a Trin ity Real Estate Investment Group (“ Tr init y I nv estments ”) is a limited liability compan y organized u nder the laws of M ass achusetts with a principal pla ce of business at 108 Beacon Street, Worcest er, Mass achus ett s.

6 7. Jose Antonio Encarnacion (“ Encarnacio n ”) is an individual with a last known address i n Wor cester, Mas sachus etts. Unti l 2024, Encarnacio n served as th e sole m anag er of Trinit y Investments. Encarn acion h as neve r been r egister ed in an y capacit y in the securitie s industry in Massachusetts. VI. STATEMENT OF FACTS A. Encarn acio n For me d T rini ty Inv estment s in Massa chus etts to Conduc t Rea l Estate Business 8. Encarn acio n file d a Certifica te of Organization with the Secr etar y of the Commonwealth, Corporations Division for Trinity I nv estments on Mar ch 14, 2020. 9. According to Trinity Investment’s Certifica te of Organization, Encarnacion formed Trinity Inve stments to purchase, sell, and dev elop real est ate. 10. Until 2024, Encarnacion served as the sole manager of Trinity Inve stments. 11. Encarn acion a cted as th e gene ral co ntracto r on Trinity I nvestments ’ rea l estat e development and renovation projects. 12. Encarn acio n used his personal network to arrange for subc ontractors to perform development and renovation work. B. En carnaci on Op erated T rini ty Inves tments From th e Ch urch Wh ere He Served A s Pasto r 13. Igl es i a C risti ana De L a Comun idad (“ Iglesia ”) was formed as a rel igious corpor ation in Massach usetts in 1996. 14. Beginning on or about May 7, 2013 Encarnacion became Pr esiden t of Iglesi a. 15. Beginning on or about May 17, 2013, Iglesia opera ted out of 108 Beacon Street, Worcester, Massachusetts (the “Church Property”). Encarnacion conducted Trinit y Investme nts ’ business from the Church Property. 16. Between 2011 and 2023, Encarnacion was the sole pastor of Iglesia.

7 17. Current ly, En carnacio n and his wi fe serve as co - pas tors of Iglesia. C. Shortly after the Formation of T rinity Investments, Encarnacion Fr audulent l y Soli cited I nvestmen ts to Develop and Renovate Real Estate 18. Begi nn in g on or about June 2020, Encarnacion, as manager of Trinity Investme nts, began so liciting inv estments. 19. Trinity Investments, with Encar nacion as its manager, ra ised funds through the issuance of promisso ry notes titled “I nvestment Verificatio n Contracts” (the “Notes”). 20. The Notes “certified” that the investor had invested a sum of money in a specific real estate project, and that, upon completion of t he “project” the investor would be repaid their initia l investment pl us interest — in some i nstan ces with interest as high as 60%. 21. According to the terms of the Notes issued by Trinit y I nvestments and sold b y Encarnacion, interest was not annualized, but rathe r w as to be paid in a single payment at maturity, regardless of the duration of the underly ing contract. 22. Encarn acion, as manager of Trinity I nvestments, r epresented to investors that their funds would be used to fund development and renovation of prop erti es al read y owned b y Trinit y I nvestments. 23. During the Rele vant Time Per iod, Trinity I nvestments rais ed more th an $10 mill io n from at least 200 investors across the United States. 24. Trinity I nv estments ra ised at least $2.3 million from at least 50 Ma ssachusett s investors. 25. In addition at least two investors outside of the United St ates, invest ed an additional $26,000.

8 D. Encarn acio n Primarily Obtai ned Inves tments fro m Immigrant C omm uniti es with Ties to I glesia 26. Investor s primarily cam e from the C entral A frican co mmunity re sidin g in the United State s. 27. Investor s primarily came from a ne twork of churches a ffiliate d with Iglesia. 28. Encarn ac ion took advantage of his posit ion of trust as pastor while solicitin g investments. 29. According to the Notes issued b y Trinity Inve stments, Encarnacion dire cted any questions to his church e- mail ad dress. 30. Encarn acion si gned th e Not es as Rev erend J os e Encarn acion. E. Trinit y Inves tment s and Encarnac ion Falsely Represen ted the Use of Invest ors’ Funds 31. Instead of using investor funds to develop and renovate properties owned by Trinity Investments, Encarnacion fraudulently used funds received from investors to: a. pay perso nal ex pens es; b. purchase the right to renovate prope rties and receive a share of the profits fro m the propert y ’s sale; c. acquire the Church Property and make mortgag e payments on the Church Propert y; d. make payments to prior investors; and e. make mortgage pa y ments on property owned by Trinity Investments. a. Encarn acio n Immediatel y B egan to Fr audulently Us e Investor Funds for Persona l Exp enses, Including Trave l Unre lated to the Busi ness of Tr init y Investmen ts 32. Encarn acio n used Trinit y Investments funds to trav el ext ensiv ely.

9 33. Encarnacion spent more than $200,000 of Trinity Investments’ funds on airline tickets and airport parking. 34. Encarnacion spent more than $60,000 of Tr inity Investments’ funds on hote ls and short- term rent als. 35. Encarn acion sp ent nearl y $30,000 on rental cars. 36. Encarnacion spent more than $40,000 of Trinity I nv estments’ funds on personal expen ses whi le travel ling. i. Domestic T ravel 37. On June 10, 2020, Trinity Investments received its first investment, totalin g $7,000 from a Florida investor (“Investor One”). 38. Encarnacion deposited Invest or One ’s investment in to Trini ty I nv estment’s s ole bank account, ending in 9919 (the “Trinity Bank Account”). 39. Encarnacion was, until Jul y 2, 2022, the sole individual with access to and control of the Trinity Bank Account. 40. Like all investors in Trini ty Investments, Encar nacion told Investor One their funds would be used to renovate property already owned by Trinity Investments. 41. Prior to this investment, the balance of the Trinity Bank Account w as $73.26. 42. On June 15, 2020, Trinity I nvestm ents received another investment, $10,000, from a New York investor (“Investor Two”). 43. Encarnacion commingled Investor Two’s investment, as w ell as all s ubsequen t investments, in the Trinity Bank Accoun t. 44. Lik e a ll i nvestors in Trinity Investments, Encarnacion told Investor Two their funds would be used to renovate property already owned by Trinity Investments.

10 45. Over time, Investor Two and their family invested more than $200,000 with Trinit y Investme nts. 46. On June 22, 2020 Encar nacion spent $446.09 of investor funds on travel, including airfare, a rent al car, an d a n out -of- state hotel room. 47. On the same da y, with no intermedia te deposits, Encarnacion spent a further $602.54 on airfare. 1 48. Upon information and belief, the purc hase of airfare was unre lated to the business of Trinity I nvestments. 49. Encarnacion, as manager of Tr inity Investments, is the owner of record of only properties located in Wes tern Mas sachus etts, prim aril y in Worces ter. 50. Trinity I nvestments i s the own er of record of only properties locat ed in Massachuse tt s. 51. Encarnacion never represented to any investor that he would use their funds to purchase, develop, or reno vate an y proper t y outside M assachus ett s. 52. Upon information and belief, a ll tr avel e xp enses Encarnacion cha rged to the Trinity Bank Account were personal in nature. ii. International Travel 1. Icelan d 53. In June 2021, Encarna cion spent more than $4,000 on airfa re, hotels, and tours traveli ng to Iceland. 54. Trinity Investments had no business in Ice land, and En carnaci on’s tri p was a personal expen se. 1 In addit ion to the expens es detail ed in this s ection, Encarn acion als o withdrew $8,000 in cas h from the Tr inity Ba nk Acco unt o n June 1 5, 20 20.

11 2. Egypt 55. In July 2021, Encarnacion spent more than $8,00 0 of Trinity Investments’ mone y traveling in Egypt, including more than $5,000 on jewelr y, and more than $1,000 on a guided tour of the Luxor temple. 56. Trinity Investments had no business in Egy pt, and Encarnacion’s trip was a personal expen se. 3. Per u 57. In July 2022, Encarnacion spent more than $1,100 travelling to Lima, Peru. 58. Trinity Investments had no business in Peru, and Encar nacion’s trip was a personal expen s e. 4. Guatemala 59. On Apr il 3, 2023, Enca rnacion spent approximately $ 5,0 00 of Trinit y Inve stments’ funds to fly himself and family membe rs to Guatemala City. 60. Once in Gu atem ala, Encarnacion used investor funds to attend a concert with his family. 61. Encarn ac ion has not refunded Trinit y Investments for personal expenses charged to the business. b. Encarnac ion Fraudule ntly Used Inve stor Funds t o Purchas e the Right to Renova te Prope rties an d Receive a S hare of Pro fits on Propert y Sale s 62. On Jul y 31, 2020, the T rinity Bank Account had a negative balan ce. 63. On August 4, 2020, Trinit y I nvestments received a wire transfer of $20,000 from a company owned by Investor One. 64. Encarn acio n a gai n told Investor On e their funds would be used to renovate property alread y owned b y Trini t y Investm ents.

12 65. After the August 4, 2020 wire t ransfer, the Trinit y Bank Account balance was $19,938.40. 66. On August 5, 2020, with no intermediate deposits, Encarnacion paid an individual from Sudbury, Massachusetts (the “Sudbury Resident”) $16,750 t o rehab ilit ate prop ert y owned by the Sudbury Resident and sh are in an y profits generat ed on the sale of the proper ties after reh abilitations. c. Encarn acio n Fraudulent l y U sed Investor F unds to Acq uir e and Refin ance the Chu rch Prop erty 67. In July 2021, after Iglesia be gan to ex perien ce fi nancial dif ficult ies, Trinit y Investme n ts acquired the Church Property, funded by a loan from a Rhode Island mortgage compan y (the “R I Mort gagor”). 68. On Jul y 14, 2021, T rinity Investme nts ’ s ole ba nk account, ending in 99 19 (the “Trinity Bank Account”) had a balance of $151,736.38. 69. On Jul y 15, 2021, an investor from Wo rceste r, Mas sachuset ts (“ Invest or Three ”) wired $20,000 into the Trinity Bank Account. 70. On Jul y 16, 2021, a different investor from Worcester, Massachusetts (“Investor Four”) wired $30,000 into t he Trinity Bank Account. 71. On July 19, 2021, a third investor from Missouri (“Inve stor Five”) wired $40,000 into the Trinity Bank Account. 72. On Jul y 21, 2021, a fourth investor from Kentucky (“Investor Six”) wired $12,000 into the Trinity Bank Account. 73. These were the only deposits of funds into the Trinity Bank Account between Jul y 14 and July 22, 2021.

13 74. On Jul y 22, 2021, Trinity I nvestments paid $201,245.51 through t wo certifie d checks to the real es tate l aw firm invol ved in t he transfer of t he Church Property to Trinity Investme n ts (the “J uly 22 n d Payment”). 75. Encarn acion us ed th e funds received from July 15, 2021 through Jul y 21, 2021, t o make the July 22 n d Paymen t in co nnection with the acquisition and refinance of the Church Propert y. 76. At no point did Encarnacion inform Investors Three through Six or any other investor that Encarnac ion would use their funds to acquire and r efinanc e the Church Propert y. d. Enca rnacio n Fraudu lent ly Made Mortgage Payments on the C hu rch Propert y Using Inve stor Funds 77. On August 25, 2021, the Trinity Bank Account had a negative balance. 78. On August 26, 2021, Trinit y Investme n ts received deposits into t he Trinity Bank Account totaling $41,000 from Investor Two and a relative, as well as a $500 deposit from Encarnacion’s personal bank account. 79. On August 27, 2021, Trinit y Investme n ts received deposits into t he Trinity Bank Account totaling $55,000 from two additional in vestors (“Inves tor Seven ” and “I nvestor Eight”). 80. Encar nacion told these inve stors, like all investor s in Trinity Investments, that their funds would be used to renovate property already owned by Trinity Investments. 81. On September 1, 2021, with no further deposits to the Trinit y Bank Accou nt, Trinit y I nvestments paid $4,940 to RI Mortgagor. 82. But for the investor funds, Trinity Investments would not have h ad sufficient funds to make the mortgage payment.

14 83. At no point did Encarnacion inform Inve stor Seven or Investor Eig ht or any other investor that Encarnacion would use their funds to make mortgage payments con cernin g the Church Property. 84. Trinit y Investments made monthl y p a yments of $4,940 to RI Mo rtgagor, in some instances making a double pa yment later to make up for missing a month, through J anuar y 2023, and made one payment of $5,187 in February 2023. 85. These payments totaled $94,132, including a $25 fee paid in March 2022. 86. During this time, Trinit y Investmen ts cha rg ed Igl e si a approximately $9,000 for use of the Church Property. 87. Trinit y I nvestments subsi dized the remaining $85,132 paid to R I Mortgagor, usin g Investor Funds and other revenue owed to Trinit y I nvestments’ inv estors to enable Encarnacion to continue making mortgage payments concerning the Church Property. e. Encarn acio n Fraudule ntl y Used I nvesto r Fund s to Mak e Payment s to Prio r In vesto rs i. In Sept em ber 2 020 Encar nacion U sed F unds Fr o m Two Inv esto rs to Pay P urported Inve stment R eturns to a Third Inve stor 2 88. On September 14, 2020, the Trinity Bank Account had a balance of $22.26. 89. Th e Trinit y Bank Account received no deposits u ntil September 24, 2020, when it received two deposits of $3,000 e ach from an investor who is pastor at a Bermuda church. 90. The Trinity Bank Accoun t received no further deposits until September 28, 2020, when it received $10,000 from another investor. 2 In addit ion to the expens es detail ed in this s ection, Encarn acion als o withdrew $2,800 in cas h on Septemb er 24, 2020.

15 91. On September 30, 2020 3, Encarnacion, as manager of Trinit y Investments, wired $10,000 to a n investor, representing purpor ted profits generated by Trinity Investmen ts ’ property renovations. ii. Encarn acio n Did Not Retur n th e Pro ceeds of a P roper ty Sal e to th e Investor Who Funded Its Renovation, Instead Paying Returns to Prio r, Unrel ated Inves tors. 92. In J une 2022, Encarnacion represented to a resident of Appleton, Wisconsin (“Investor Nin e ”) that Trinit y I nvestments owned a propert y in Southbridge, Massachusetts (the “Southbridge Property”), and that Trinity I nvestments needed funds to renovate the property so it could be sold for a profit. 93. Investor Nin e invested a total of $60,000, including $56,250 by wire on June 29, 2022. 94. Trinity Investments acquired the Southbridg e Property on September 8, 2022, for $96,500. 95. Also on September 8, 2022, Trinity Inve stments granted a mortgage secure d b y the Southbridge Property in exchange for the receipt of $138,000 from a re sident of Natick, Massachuse tt s. 96. On June 16, 2023, Trinity Investments sold the Sout hbridge Property for $220,000, and received proceeds of $95,047.61 on the sale. 97. Encarnacion did not return an y of the p roceeds of t his s ale to Investor Nine. 98. I nstead Enca rnacion used the p roceeds to return funds to ot her investors, mak e mortgage payments, purchase airfar e, rent c ars, an d pa y personal ex penses. 3 Fr o m Septem ber 28 thr oug h 30, 2020, Encarn acion spent $228.0 0 on airfare, and $7 92.11 on Ai rbnbs.

16 iii. In Se ptember 2022, Encarnac ion Use d Funds Invested by a Conn ecticut Res iden t to Pay Purpor ted Retu rn s to a Pri or Inv estor 99. On Sept emb er 14, 2022, the Trinit y Bank Account had a balance of $3,010.12. 100. The following da y, on September 15, 2022, Trinit y I nvestmen ts recei ved an investment of $100,000 by wire into the Trinity Bank Account from a Connecticut resident. 101. Also on September 15, 2022, Encarn acio n wired $47,000 from the Trinity Bank Account, purporting to be profits generated by Trinity Investments, to a prior investor. iv. In April 20 23, Enc arnac ion Use d Funds F rom Fiv e Inves tors to Pay Purport ed Return s t o S ix Prior Investors 102. On March 30, 2023, the Trinity Bank Account had a balance of $509.54. 103. On March 31, 2023, Trinity I nvestments received four deposits from three investors into the Trinity Bank account, totaling $120,000. 104. On April 3, 2023, Trinity Investmen ts re ceived a wi re trans fer in th e amount of $10,000 from an investor. E ncarnacion also deposited $500 cash into the Trinity B an k Account t he same d a y. 105. Also on April 3, 2023, with no other intermediate deposits, Encarnacion wired $52,250 from the Trinity Bank Ac count, purporting to be profits generated b y Tr init y Investme nts, to three prior investors. 106. On April 4, 2023, Trinity Investme n ts received an investment of $30,000 from an investor, made by wire into the Trinity Bank Account. 107. On April 5, 2023, Trinit y Investments receiv ed $3, 000 from a tenant of a p ropert y Trinity Investments owns. 108. Also on April 5, 2023, Encarnacion wired $47,900 from the Trinit y Bank Account, purporting to be profits generated by Trinity Investments, to three prior investors.

17 v. In July 2023, Encarnacion Used F unds Inves ted by a n Okla homa Resid ent to Pay Purpo rted Returns to a P rior I nvest or 109. On Jul y 18, 2023, the starting balance of the Trinity Bank Account was $4,231.75. 110. On Jul y 18, 2023, the T rinity Bank Account received an investment of $50,000 from a resid e nt of Oklahoma. 111. On Jul y 18, 2023, Encarnacion paid an approx imately $2,500 credit card bill, made an approximately $7,000 mortgage payment, and wired $20,000 from the Trinity B ank Account, purporting to be profits generated by Trinity Investments, to a pri or investor. vi. Encarnac ion Used Funds Invest ed in a Spe cifie d Property t o Pay Mortgages on Other Properties, Pay Prior Investors, and Make Cash Withdrawals 112. On Jul y 19, 2023, Trinit y In vestmen ts rece ived a further investment of $50,000 by wire trans fer f rom a resident of Cranston, Rhode Island (“Investor Ten ”). 113. Investor Ten ’ s wire indica ted it was relate d to 302 Sumner Ave in Sprin gfie ld, Massachu setts (“302 S umn er”). 114. Trinity Inve stments pr eviousl y acquired 302 Sumner in June 2021 through an owner- financed arran gemen t 4. 115. Also on July 19, 2023, Encarnacion wire d $8,500 from the Trinity Bank Account, purporting to be profits generated by Trinity Investments, to two prior investors. 116. On Jul y 20, 2023, with no intermediate depo sits, Trinity I nvestments mad e mortgage pay ments of approximatel y $15,000, an d Encarnacion withdrew $8,500 in cash from the Trinity Bank Account. 4 In an o wner fina nce d de al, rathe r tha n pur cha si ng the pro pe rty fro m the o wn er and ma king mor tgage payme nt to a b ank, t he p urcha ser make s mo nthl y pa yment s t o the pr evio us o wner o f the p ro per ty.

18 117. None of the mortgage payments made on Jul y 20, 2023, were made t o the prior owners of 302 Sumner. 118. Trinity Investments next paid the prior owners on August 30, 2023. 119. On Jul y 31, 2023, the T rinity Bank Account had a negative balan ce. v ii. Encar nacion Used F unds Investe d by a Ke ntucky Reside nt to Pay Returns to a Prior Investor 120. On Jul y 28, 2023, the T rinity Bank Account had a beginning balance of $780.05. 121. Also on July 28, 2023, Tr inity Inve stments received an investment by w ire of $18,000 into the Trinity Bank Account from a resident of Louisville, Kentuck y, and wi red $15,000, purporting to be profits generated by Trinity Investments to Investor T hree. v iii. In March 2024, Encarnacion Used Funds Investe d by a Resident of Worcest er, Massa chu setts, and T wo Oth ers, to Pay Purported Returns to Prior I nves to rs 122. On March 6, 2024, the Trinity Bank Account had a balance of $4,773.20. 123. On March 8, 2024, Trinity Inv estments received a n investment of $20,000 from a resident of Wo rceste r, Mas sachus etts, deposited i nto the Trinity Bank Account. 124. Also on March 8, 2024, Trinity Investme nts received invest ments from two other individuals, totaling $47,000, by wire into the Trinity Bank Account. 125. On March 11, 2024, Trin ity Inve stments received an investment of $20,000 by wire from another investor, and Encar nacion wired $25,500 from the Trinity Bank Account, purporting to be profits genera te d b y Trinit y Inve stments, to a prior investor. 126. On March 12, 2024, Trinity Investmen ts r eceived thre e investme nts totaling $30,000 from two individuals b y wire, and Encarnacion wired a total of $ 59,000 from the Trinity Bank Account, purporting to be prof its g enerat ed b y Trinit y Investments, to five prior investors.

19 ix. In Septem ber 2024, Encarnac ion Used Funds Invest ed by T wo Ind ividua ls to Pay Purp ort ed Retu rns to Three Prior I nvesto rs 127. On September 6, 2024, the Trinit y Bank Account had a negative beginning balan ce. 128. Also on September 6, 2024, Trinity I nvestments receiv ed two investmen ts totaling $45,750 by wire fro m I nvestor T en and another investor, and Encar nacion made pa y m ents totaling $31,000 from the Trinity Bank Account, purporting to be profits generat ed b y Trinit y I nvestments, t o Investor Two’s relative and two other investors. F. Nei ther Tri nity Inve stments Nor E ncarn acion Has E ver Regi stered Themselv es or T heir N otes i n Mass achus etts 129. Encarn acion has never b een re giste red in an y cap acit y in the securities industry in Massachuse tt s. 130. Trinity Inve stments h as never regis tered its N otes with the Divisio n. 131. Encarn acion has never r egis tered Trinit y Inve stments’ Notes with the Divis ion. 132. Trinity I nvestments has never registered with the Division as a n issu er agen t. 133. Encarnacion has never registered with the Division as an issuer agent. 134. Trinity Inve stments has never taken an y steps t o determ ine whet her an ex emption from registering the Notes under the Act exists. 135. Encarn acion has never t aken an y steps to det er mine wh ether an exemption from register ing Trinity I nvestments’ Notes under the Act exists. V II. VIOLATIONS OF LAW Count I - Violations of M.G.L. c. 110A, § 101 136. Section 101 of the Act provides: It is unlawful for a ny person, in connection with the offer, sale, or purchas e of an y securit y, direct l y or indi rectl y (1) to employ any device, scheme, or artifice to defraud,

20 (2) to mak e any untrue statement o f a mate rial fact or to omit to sta te a material fact n ecess ary in order to make the s tat ements made, i n the l i ght of the circumstances under which they are made, not misleading, or (3) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person. M.G.L. c. 110A, § 101 137. The Divisio n rest ates an d i ncor porates the factual allega tions set forth in Sections IV through VI above. 138. Respondents’ acts and practices, as described above, constitute violations of M.G.L. c. 110A, § 101. Count I I – V iolations of M.G.L. c. 110A, § 201 139. Section 201 of the Act provides in relevant part: (a) It is unlawful for an y person to transact business in this commonwealth as a broker-dealer or agent unless he is registered under this chapter. (b) It is unlawful for a n y broker - dealer or issuer to employ a n agent unless the agent is registered. The registration of an a gent is not effective during any period when he is not associated with a particular broker - dealer registered under this chapter or a particular issuer. When an agent begins or termin ates a conn ecti on w ith a bro ker - deal e r or issuer, or begins or termin ates th ose activ ities which m ake him an agent, the agent as well as the broker- dealer o r issuer shall pr omptly no tify the secreta ry. M.G.L. c. 110A, § 201. 140. The Divisio n rest ates an d i ncorpor ates t he fa ctua l alle gations set forth in Sections IV through VI ab ove. 141. Respondents’ acts and practices, as described above, constitute violations of M.G.L. c. 110A, § 201.

21 Count I II – V iolations of M.G.L. c. 110A, § 301 142. Section 301 of the Act provides: It is unlawful for any person to o ffer o r s ell an y securi ty in th e commonwealth unless: -- (1) the s ecurit y is re gister ed und er this chapt er; (2) the security or transaction is exempted under section 402; or (3) the s ecurit y is a fed er al cover ed secu rit y. M.G.L. c. 110A, § 301. 143. The Divisio n restates and incorp orates the factual alleg ations set forth in Sections IV through VI ab ove. 144. Respondents’ acts and practices, as described above, constitute violations of M.G.L. c. 110A, § 301. V III. STATUT ORY BASIS FOR RE LIEF Section 407A of the Act provides, in pertinent part: (a) If the secretar y de termines, after notice and o pportunity for hearing, that any person has engaged in or is about to engage in any a ct or practice constituting a violation of any provision of this chapter or any rule or order issued thereunder, he may order such person to cease and desist from such unlawful act or pra ctice and may take such aff irmat ive action, including the imposition of an administrative fine, the issuance of an order for an accounti ng, di sgor gemen t or res cis sion or any other such relief as in his judgment may be necessary to carry out the purposes of [the Act]. M.G.L. c. 110A, § 407A. I X. PUBLI C INTEREST For any and all of the re asons set forth above, the Division asserts that this “action is necess ar y or appro p riate in the public interest or for the protection of investors and consistent with the purposes fairly intended by the policy a nd provisions of [t he Act].”

22 X. RELIEF REQUESTED The Division requests that an order be entered: A. Finding a s fact all alleg at ions set forth in Sections I V through VI of the Complaint; B. Concluding that Respondents violated the Act and the Regulations as al leged in Sectio n VII of this Complaint; C. F inding that all of the sanctions a nd remedies detailed her ein are necessary or appropria te in the public interest or for the protect i on of inves tors and consi stent with the purposes fairl y intended by the policy and provisions of the Act; D. Requiring Re sponden t s to permanentl y ceas e and desist from further acts and practi ces in violati on of the A ct and Reg ulations; E. Imposing a dministrati ve fines on R esponden ts in such amount and upon suc h terms and condit ions as the Director or Presi ding Officer may determine; F. Requiring Resp ondents to provide a verifie d acc ounting of the use of all fund s received from inve stors; G. Requiring Re sponden ts to make r escission of fers, i ncluding interest, t o all inve stors in connectio n with the wrong doi ng; H. Censuring Responden t(s); I. Permanently barring Respondent s from reg ist ering in Massachus etts as, ass ociati ng or affiliating with, or a cting as a(n) broker - dealer, broker - d ealer agent, i nvestm ent adviser, invest ment ad viser rep resen tative, Secu riti es and Ex change Com miss ion - registered investment adviser, an investment adviser exempted from reg istratio n, a person relying on an exclusion from the definition of investment adviser or broker -

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