FOR IMMEDIATE RELEASE
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BALTIMORE, MD – Attorney General Anthony G. Brown announced today that his Securities Division reached a settlement with Middle Class United, Incorporated, (MCU) a Maryland entity that used social media to promote and issue investment contracts, which they unlawfully called “memberships,” to more than 6,500 investors across the country.
Four individuals affiliated with MCU were parties to the consent order: Spencer Lutgring of Lehi, Utah; Joseph Madden of Ocean Springs, Mississippi; Jeremy Powell of Draper, Utah; and Jarod Wetzel of Lehi, Utah (Settling Parties). The Securities Division has also issued an order to show cause against Joseph Redden, of Pinellas County, Florida. Redden, the founder of MCU and its key promoter, declined to enter into the consent order. The order to show cause initiates an enforcement action against Redden and gives him the opportunity to respond to the allegations in the order.
“By using social media to sell false promises and then pocket their clients’ money, Middle Class United preyed on investors who just wanted to build themselves a more secure financial future,” said Attorney General Brown. “This settlement makes clear that our Office will hold accountable anyone who uses deceptive schemes to exploit Marylanders’ financial hopes.”
According to the consent order and allegations in the order to show cause, Redden, who is a social media personality known as the “Older Millennial,” pitched the idea of an investment vehicle for the middle class. In videos on platforms such as TikTok and YouTube, Redden claimed that middle class investors were prevented from investing in hedge funds because of regulations requiring investors to be accredited. Initially Redden pitched the idea as a middle class hedge fund, but once he determined that a hedge fund would require regulatory oversight, he began calling the opportunity a “cooperative.” As Redden’s promotional efforts gained traction, Lutgring, Madden, Powell, and Wetzel joined the effort and the group formed MCU in Maryland as a tax-exempt non-stock corporation.
In May 2024, MCU launched its offering, after months of promoting that it was selling “memberships” to a “housing cooperative.” Each membership was $500 and, according to the settling parties and Redden, who promoted the offering on their social media channels, the proceeds would be used for a variety of investments, primarily in the real estate sector, and a portion of the funds would be donated to charity. Under Maryland law, a housing cooperative must offer its members shares in the corporation and a possessory interest – such as proprietary lease or occupancy in a unit or units – in real property. However, MCU did not own, nor have the capital to purchase, sufficient real property for the 6,500 investors to have a possessory interest.
Ultimately, investor funds were divided between a managed brokerage account, where they were placed into a mutual fund, and a checking account. The settling parties used those funds to pay a variety of administrative expenses, including their own salaries. According to the promotional efforts of Redden and the settling parties, management of MCU’s funds was promised to be entirely transparent, with member-investors having a say in every financial decision. However, Lutgring, Madden, Powell, and Wetzel regularly initiated transactions out of the checking account without the approval of investors. Redden was Treasurer of MCU until approximately December 2024 when he did not seek re-election.
The parties did not disclose that the funds would be used to pay for salaries, travel, and other administrative expenses. No funds were donated to charity. In fact, MCU operated identical to any other pooled investment vehicle but without the required regulatory oversight.
Pursuant to the settlement, investors will be repaid $414, which is more than an 80% pro rata share of their original investment, using the remaining funds held in MCU’s two accounts. The settling parties have agreed to pay a $50,000 civil penalty to the Securities Division. Pursuant to the order to show cause issued against him, Redden is subject to being assessed a $5,000 civil penalty for each violation of the Securities Act.
In making today’s announcement Attorney General Brown thanked Assistant Securities Commissioner Katharine Weiskittel, Assistant Attorney General Ali Pearson, and Chief Investigator Joshua Schaefer for their work on this matter.
A copy of the Consent Order can be found here. A copy of the Order to Show Cause can be found here.
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