Sonn Law Group is investigating recovery options for investors in S2A Modular Corp. and the S2A Investments LLCs. Free, confidential consultations.
We covered the SEC’s fraud complaint against S2A Modular co-founders Brian Kuzdas and John Rowland – an alleged $65 million offering fraud involving nearly 350 retail investors and a network of “MegaFactories” that never got built. [Read that post here.]
The question being asked is: the SEC sued them, so am I getting my money back?
Here’s where recovery actually lives.
An SEC case is not a refund program
SEC enforcement produces injunctions, civil penalties, and officer-and-director bars. Penalties go to the U.S. Treasury. Nothing in that process returns capital to the people who wired money into these LLCs.
Recovery in a private placement collapse almost always runs through someone other than the issuer — because the issuer is usually broke by the time regulators arrive. The question that matters isn’t what did S2A do? It’s who put you into it, and what did they owe you?
Three ways S2A interests reached investors
The complaint describes sales through webinars, online shareholder meetings, in-person meetings, and written updates. That points to three channels, each with a different claim.
1. A registered rep at a broker-dealer. Subject to FINRA suitability rules and Regulation Best Interest. An illiquid, unaudited, single-asset private placement in pre-revenue construction is hard to justify for most retail investors and if the firm approved it, the firm owed reasonable due diligence.
2. An investment advisor (RIA). Fiduciary duty applies: a higher standard than suitability, including an obligation to investigate and to disclose any compensation.
3. An unregistered finder or “consultant.” The channel we consider most likely, and the one investors least understand. Anyone taking transaction-based compensation for selling securities generally must be registered as a broker. Someone who brought investors in for a cut without a license may be an unregistered broker which creates liability and, in many states, a statutory rescission remedy allowing the investor to unwind the purchase.
The Form D problem
Companies selling under Regulation D must file a Form D with the SEC. Item 12 requires identifying any broker, dealer, or finder compensated for sales. Item 13 requires the total amount sold. Material changes require amendment.
Our review of the public EDGAR record for the S2A entities found:
- No selling brokers, dealers, or finders identified.
- Amounts reported far below what the SEC alleges was raised – roughly $5.1 million disclosed across three entities, against approximately $37.1 million the complaint attributes to those same three.
Two takeaways. First, no named selling agent doesn’t mean no one is responsible – it may mean the seller was unregistered, which is often a stronger claim, since registration violations don’t require proving fraud. Second, Reg D is a safe harbor with conditions. If the exemption wasn’t available, the offering may have been an unregistered securities offering – and Section 12(a)(1) of the Securities Act gives purchasers a rescission remedy against those who sold to them.
That claim exists whether or not a brokerage firm was ever involved.
The retirement account angle
The complaint alleges that in August and October 2024, Kuzdas urged investors to fund purchases using IRA rollovers, 401(k)s, traditional IRAs, and Roth accounts – before institutional money supposedly arrived.
If you used retirement assets:
- A self-directed IRA custodian processed the transfer. Custodians disclaim due diligence duties, but their conduct and disclosures still matter.
- Anyone who advised the rollover made a recommendation. Under Reg BI and DOL guidance, rollover recommendations are covered recommendations.
- Concentrating retirement savings in one illiquid, unaudited private issuer is difficult to defend under any standard of care.
These are frequently the strongest claims in cases like this. Don’t assume you have none because you signed the paperwork yourself.
Checklist: identifying who’s responsible
Most investors have the answer in a folder.
- Subscription agreement – look for a “selling agent” line or a countersignature by anyone outside S2A.
- Private placement memorandum – check the cover page and “Plan of Distribution” for a named broker-dealer or placement agent.
- Who first told you about S2A – a name is enough to start.
- Run that name through FINRA BrokerCheck and the SEC’s IAPD – “no records found” is itself meaningful, and may indicate an unregistered seller.
- Webinar invitations and shareholder emails – personal address, firm domain, or S2A address?
- Wire confirmations and statements – amount, date, receiving entity.
- Retirement paperwork – custodian agreement and rollover documents, if applicable.
A licensed person anywhere in that chain likely means a FINRA arbitration claim. No licensed person may still mean unregistered-broker and rescission claims.
Either way, the answer isn’t “nothing.”
“My firm says they never approved this”
Expect to hear it. It’s called selling away – a rep sells outside the firm’s approved platform, and the firm disclaims responsibility.
That defense fails more often than firms let on. Brokerage firms have an independent duty to supervise, including monitoring for outside business activities and undisclosed private securities transactions. When a rep uses firm email, meets clients at the firm’s office, or sells to the firm’s own client list, the supervisory failure is the claim.
A firm’s denial is the start of the analysis, not the end.
The clock is running
FINRA’s eligibility rule generally bars claims filed more than six years after the events at issue. State statutes of limitations are often shorter – sometimes two or three years from discovery.
The earliest S2A raises date to 2018. Investors who bought between 2018 and 2021 are at or near the outer edge of that window now. Waiting for the SEC case to resolve is the most common and most costly mistake investors make.
Before you call
Gather what you have: subscription agreement and PPM, wire confirmations, any 2023 Roll-Up contribution agreement, emails and shareholder updates, the name of whoever introduced the investment, self-directed IRA paperwork, and any K-1s or distribution records.
Frequently Asked Questions
I invested directly, with no broker. Do I have a claim? Possibly. Unregistered-broker and Section 12(a)(1) rescission theories don’t require a brokerage firm. It turns on who solicited you and whether they were paid.
The person who sold me this isn’t on BrokerCheck. That favors you. Unregistered persons selling securities for compensation face liability, and many states give investors rescission rights against them.
I signed documents saying I was accredited and understood the risks. Am I stuck? No. Risk disclosures don’t immunize anyone from fraud, unsuitable recommendations, or registration violations. Firms lean hard on this argument; it routinely fails.
Is there a class action? None that we’re aware of. For private placements, individual FINRA arbitration is typically faster and produces better outcomes, since damages are investor-specific.
What does it cost? Nothing upfront. We handle investor claims on a contingency-fee basis — no recovery, no fee.
Contact Sonn Law Group
We represent investors nationwide in FINRA arbitration and securities litigation. If you invested in S2A Modular Corp., S2A Investments LLC, or S2A Investments 2, 5, 9, or 36 – or if anyone recommended a modular-construction private placement to you – contact us for a free, confidential case evaluation.
The SEC’s allegations are allegations only. This post also discusses publicly available regulatory filings; discrepancies between those filings and the SEC’s complaint are noted as matters of public record and are not, standing alone, allegations of wrongdoing against any person not named in the SEC’s action. Nothing here is legal advice or a guarantee of any outcome.
