SEC Charges Hotel Funds With Raising About $86 Million on False Statements: Claimed 11 Hotels While Holding a Preferred Interest in Only One
The U.S. Securities and Exchange Commission (SEC) filed suit on June 4, 2026, in the U.S. District Court for the Northern District of Texas, charging Phoenix American Hospitality, LLC, based in Dallas, Texas, and its president William Lee Nelson with raising about $86 million through false statements. The following are allegations in the SEC complaint; the case has not been decided.
The SEC alleges that from March 2022 through July 2024 the defendants raised money from retail investors through two hotel-focused funds: about $56.6 million from about 1,300 investors in the first fund and about $29.4 million from about 750 investors in the second fund, more than 2,000 investors in total. Both funds were offered under the Regulation A exemption.
On assets, the SEC alleges the defendants claimed the first fund owned as many as 11 hotels, when in reality, before January 2024, the fund held only a $1.5 million preferred equity investment made in September 2020 in a single hotel. On profitability and distributions, the SEC alleges the defendants claimed both funds were profitable and paid profit distributions of up to 12 percent a year, when neither fund was profitable and the distributions were primarily funded by returns of investor capital.
The SEC further alleges that Nelson directed a consulting firm to create and disseminate marketing materials containing the same untrue statements. The defendants are charged with violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
Source: U.S. Securities and Exchange Commission
Published by GSM · USA (original Chinese edition)
Photo: 图：位于美国德克萨斯州达拉斯市的城市天际线黄昏景（资料照片），被告公司主营业地在达拉斯。Matthew T Rader 摄，CC BY-SA 4.0，经 Wikimedia Commons。 / Photo: The Dallas, Texas, skyline at dusk (file photo); the defendant company is based in Dallas. Photo by Matthew T Rader, CC BY-SA 4.0, via Wikimedia Commons.
