SEC v. Quest Education L.L.C., Daniel Blue, David Christopher White, et al. — U.S. Securities and Exchange Commission Litigation Release No. 26226, dated January 17, 2025.
The SEC charged Quest Education LLC, its principal Daniel Blue, and former employees David Christopher White and Keitoh Jordan Spears for acting as unregistered brokers. They solicited customers to invest in unregistered securities offerings, receiving approximately $2.5 million in commissions, including from a company previously charged with fraud.
In Plain English
Imagine a company that says it helps people invest their retirement money. Instead of just giving advice, they secretly took money from investment companies to push those companies' investments to their customers. They didn't tell their customers they were getting paid by these investment companies, and they weren't registered to do this kind of selling. The SEC stepped in to stop this practice and hold them accountable.
Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.
How the Alleged Scheme Worked
- Establish 'Financial Education' Front Quest Education LLC presented itself as a company focused on financial education, assisting customers in setting up self-directed IRAs and 401(k)s to invest in alternative assets.
- Solicit Investments from Customers Between October 2019 and April 2023, Quest Education actively solicited its customers to invest in unregistered securities offerings from various companies (Securities Issuers).
- Receive Commissions from Issuers In exchange for directing customer investments, Quest Education received approximately $2.5 million in commissions from these Securities Issuers, which constituted over 50% of its revenue during the period.
- Principal's Involvement Daniel Blue, Quest's principal, worked closely with the Securities Issuers to understand their businesses and funding needs, enabling Quest to market their investment opportunities more effectively.
- Employee Sales Efforts Employees David Christopher White and Keitoh Jordan Spears promoted various unregistered offerings to Quest customers, often vouching for the legitimacy of the entities and their principals.
- Distribute Marketing Materials Quest sometimes distributed marketing materials, including interviews conducted by Blue with principals of the Securities Issuers, to further promote the investment opportunities.
- Process Customer Investments When customers decided to invest, Quest processed the necessary paperwork to transfer funds from their self-directed IRAs and 401(k)s to the Securities Issuers.
- Employee Commissions White and Spears each received a portion of the commissions, up to one percent on securities purchased by their customers, with each earning over $200,000 between October 2019 and March 2024.
- Promote Fraudulent Offering Quest Education allegedly received approximately $1.4 million in commissions from MJF Holdings, LLC, a company the SEC had previously charged in April 2023 for a $20 million offering fraud.
- Operate Unregistered Throughout this period, Quest Education, Blue, White, and Spears were neither registered as brokers or dealers with the SEC nor associated with any registered broker or dealer.
- Sell Unregistered Securities None of the Securities Issuers' offerings that Quest promoted were registered with the SEC, violating securities laws.
The Enforcement Action
The SEC charged Quest Education LLC, its principal Daniel Blue, and former employees David Christopher White and Keitoh Jordan Spears with acting as unregistered securities brokers and selling unregistered securities. The SEC seeks permanent injunctive relief, disgorgement with prejudgment interest, and civil penalties.
Named in this action: Quest Education L.L.C., Daniel Blue, David Christopher White, Keitoh Jordan Spears.