$65 MILLION FRAUD: Founders Hoodwinked Investors on MegaFactory Dream!

SEC v. Brian Kuzdas and John Rowland — U.S. Securities and Exchange Commission Litigation Release No. 26593, dated July 24, 2026.

The SEC charged Brian Kuzdas and John Rowland with defrauding nearly 350 retail investors out of approximately $65 million. They allegedly misused investor funds, misrepresented customer demand, and falsely claimed imminent institutional investment for their modular construction business, S2A Modular Corp.

In Plain English

Imagine you invested money to help build a special factory. The people running the factory told you your money would only be used for the factory you picked. But, they secretly used a lot of your money for a different factory. They also lied about how many customers they had and said big investors were coming when they weren't. Now, they have to pay penalties and can't run companies for a while.

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

1. Raising Funds for MegaFactories From April 2018 through January 2025, Brian Kuzdas and John Rowland raised about $65 million from nearly 350 retail investors nationwide. They promised investors that their money would be used to finance the construction and operation of 'MegaFactories' designed to manufacture modular building units.
2. Promising Specific Factory Funding Defendants told investors they could choose a specific MegaFactory to fund. They promised that investors would receive returns generated solely from the profits of their chosen MegaFactory, making the choice seem critical.
3. Diverting Funds to Patterson MegaFactory Contrary to their promises, from May 2021 through December 2022, Defendants diverted a substantial portion of investor funds to a single facility in Patterson, California, without informing the investors who had selected other MegaFactories.
4. Misrepresenting Customer Demand From 2020 through 2023, Defendants falsely claimed they had over 600 modular units under contract, when in reality, they had only secured about 100 contracts by the end of 2024. They also claimed 'on order' units were binding when they were not.
5. Fabricating Institutional Investment Claims From 2022 through early 2025, Defendants repeatedly told investors that large institutional investments were imminent, despite knowing these claims were false as they had only engaged in preliminary discussions and refused to conduct necessary audits.
6. Pressuring Investors to 'Roll-Up' Later in the scheme, Defendants pressured investors to 'Roll-Up' their investments into a larger entity, implying they would otherwise risk losing their investments entirely, further consolidating control and obscuring the true financial state.

The Enforcement Action

SEC Files Settled Action Against Founders of Modular Construction Startup Alleging $65 Million Offering Fraud. On July 23, 2026, the Securities and Exchange Commission filed settled charges against Brian Kuzdas and John Rowland for allegedly operating an offering fraud through S2A Modular Corp., a modular construction business they co-founded, and related entities. The Commission alleges that Defendants misused significant portions of investor funds and misled investors about customer demand and the prospects for institutional investment in their business. The SEC’s complaint, filed in the United States District Court for the Northern District of California, alleges that from approximately April 2018 through January 2025, Defendants raised approximately $65 million from nearly 350 retail investors nationwide to finance the construction and operation of “MegaFactories” across the United States. Without admitting the allegations in the SEC’s complaint, Defendants have consented to the entry of final judgments, subject to court approval, which would permanently enjoin them from violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b 5 thereunder, order each to pay a $200,000 civil penalty, and impose on each two-year officer and director bars.

Named in this action: Brian Kuzdas, John Rowland.

Original SEC litigation release ↗ · Browse all cases