Sonn Law Group is investigating claims on behalf of investors who purchased interests in S2A Modular Corp. or the S2A Investments LLCs.
What the SEC Alleges
On July 23, 2026, the U.S. Securities and Exchange Commission filed a civil fraud complaint in the U.S. District Court for the Northern District of California (Case No. 5:26-cv-07616) against Brian Kuzdas, 62, of Palo Alto, California, and John Rowland, 55, of Huntington Beach, California.
According to the complaint, from approximately April 2018 through January 2025, the two men raised roughly $65 million from nearly 350 retail investors nationwide through private placements to build a national network of “MegaFactories” that would manufacture modular building units.
View FLORIDA SEC Litigation Complaint 26593
The SEC charges both defendants with violating:
- Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
- Section 17(a) of the Securities Act of 1933
The Commission is seeking permanent injunctions, civil monetary penalties, and officer-and-director bars against both men.
Three Categories of Alleged Misrepresentations
1. Where the money actually went
Investors were told to pick a specific MegaFactory to fund — Hemet, CA; Patterson, CA; Waco, TX; Macclenny, FL; or Punta Gorda, FL — and that their returns would depend solely on that facility. Private placement memoranda identified exact parcels, and in one August 2022 letter Kuzdas allegedly reminded investors that all benefits were tied to the performance of a single factory.
The SEC alleges that from May 2021 through December 2022, the defendants moved more than $20 million out of the individual LLC accounts into an “S2A Modular Headquarters Corporation” account, then redirected more than $8 million of it to the Patterson, California facility – without disclosing the diversion to investors. Ultimately, only one MegaFactory was ever built.
2. Customer contracts and demand
The complaint alleges the defendants claimed in webinars as early as 2020 to have “over 600 units” under contract, later touting “900 plus units on order,” 1,000+ units in Florida, and multi-hundred-unit projects in Arizona and Sacramento. In reality, the SEC says, the “orders” were non-binding and S2A had at most roughly 100 contracts as of the end of 2024 and could not produce anything at all until Patterson received its certificate of occupancy in January 2024.
3. Institutional funding “at the doorstep”
From 2022 into 2025, the defendants allegedly promoted imminent institutional capital: $400 million in “verbal commitments,” a projected $1.5 billion pipeline, $110 million in letters of intent, and later “about $3 billion in the institutional pipeline.” The SEC alleges none of it ever materialized, and that the company lacked the independent audited financials Kuzdas himself understood institutions would require.
The retirement-account angle
Particularly troubling: the complaint alleges that in August and October 2024, Kuzdas urged retail investors to deploy IRAs, IRA rollovers, 401(k)s, and Roth accounts to get in “before institutional investors” arrived.
The “Roll-Up”
In February–March 2023, investors were allegedly pressured to sign contribution agreements swapping their LLC membership interests for S2A Modular stock — or risk losing their investments. An additional ~$5.065 million was raised through S2A Modular between February 2023 and December 2024.
Capital Raised Per Entity (Through February 2023)
| Investment LLC | First Raise | Amount Raised |
|---|---|---|
| S2A 1 / Hemet–Waco | 2018 | $14,676,541 |
| S2A 2 / Patterson | 2020 | $15,240,000 |
| S2A 5 / Hemet | 2021 | $7,230,000 |
| S2A 9 / Macclenny | 2020 | $14,415,000 |
| S2A 36 / Punta Gorda | 2022 | $7,600,000 |
| Total | over $59 million |
What This Means for Investors
An SEC enforcement action is a government claim for injunctive relief and penalties — it is not a mechanism for making defrauded investors whole. Recovery for individual investors typically runs through separate avenues, including:
- FINRA arbitration against any broker-dealer, registered representative, or investment advisor who recommended or sold these private placements. Brokers who sold unregistered or Reg D private placements owe customers duties of suitability and Regulation Best Interest compliance, and firms owe a duty to conduct reasonable due diligence and supervise their representatives.
- Selling-away and failure-to-supervise claims, where a registered rep marketed the offering outside their firm’s approved product list.
- Claims involving retirement assets, where IRA and 401(k) rollovers were steered into illiquid, speculative private offerings.
Importantly: even where the issuer is insolvent, a brokerage firm that recommended the investment can be held liable for its own conduct. That is where investor recovery most often happens.
Time Limits Matter
FINRA’s eligibility rule generally bars claims filed more than six years after the events giving rise to the dispute, and state statutes of limitations may be shorter. Investors who purchased S2A interests in the 2018–2021 window should evaluate their options promptly.
Contact Sonn Law Group
Sonn Law Group represents investors nationwide in securities arbitration and litigation. If you invested in S2A Modular Corp., S2A Investments LLC, S2A Investments 2, 5, 9, or 36 (or if a financial professional recommended a private placement in modular construction) contact us for a free, confidential case evaluation.
We handle investor claims on a contingency-fee basis: no recovery, no fee.
The allegations described above are drawn from the SEC’s civil complaint and are allegations only. Neither defendant has been found liable, and both are presumed innocent of the charges unless and until proven otherwise in court.
