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An illustration of a proposed man camp. Image courtesy of North Dakota Developments LLC.

The U.S. Securities and Exchange Commission filed charges Tuesday against North Dakota Developments LLC for allegedly defrauding investors out of $62 million in a short-term housing scheme.

The SEC alleges that NDD and its two owners, Robert L. Gavin and Daniel J. Hogan, raised over $62 million from hundreds of U.S. and foreign investors to build four short-term housing facilities, also known as man camps, in Bakken.

The defendants allegedly misappropriated over $25 million in investor funds to pay for personal expenses, make undisclosed commission payments to sales agents, invest in unrelated Bakken projects, and to make Ponzi-like payments to some early investors.

According to the SEC, the investors bought “units” in the projects on the promise of an annual return rate of up to 42 percent and assurances that NDD would quickly build and jointly manage the projects.

The SEC also alleges that the defendants offered investors an option to receive a “guaranteed” annual return of up to 25 percent “without regard to actual rent income.”

“Despite the substantial amount of funds raised by the defendants since May 2012, at the present time, none of the projects are fully operational and one of the projects offered does not even have governmental approval for construction to begin,” the SEC said.

The SEC has frozen the company’s assets and a court hearing has been set for May 18.