Social Media Investment Scheme Unravels, Investors to Recoup Majority of Funds

Maryland Attorney General Anthony G. Brown has announced a settlement with Middle Class United, Incorporated (MCU), a Maryland-based entity that allegedly defrauded over 6,500 investors nationwide through a social media-driven investment scheme. The company, which marketed its investment contracts as “memberships,” is accused of misrepresenting its operations and using investor funds for administrative expenses, including salaries, rather than for the promised investments and charitable donations.

The settlement, reached by the Attorney General’s Securities Division, involves four individuals affiliated with MCU: Spencer Lutgring of Lehi, Utah; Joseph Madden of Ocean Springs, Mississippi; Jeremy Powell of Draper, Utah; and Jarod Wetzel of Lehi, Utah. These parties have agreed to a consent order. However, the Securities Division has also issued an order to show cause against Joseph Redden of Pinellas County, Florida, the founder and primary promoter of MCU. Redden, known on social media as the “Older Millennial,” declined to enter into the consent order and will face an enforcement action initiated by the order to show cause, which allows him an opportunity to respond to the allegations.

The scheme, as detailed in the consent order and the order to show cause, began with Redden promoting an investment vehicle purportedly for the middle class. He initially described it as a hedge fund accessible to those not meeting the criteria for accredited investors, eventually rebranding it as a “cooperative” after determining a hedge fund would require regulatory oversight. As the concept gained traction through platforms like TikTok and YouTube, Lutgring, Madden, Powell, and Wetzel joined Redden, and the group established MCU as a tax-exempt non-stock corporation in Maryland.

In May 2024, MCU launched its offering, marketing “memberships” for $500 each to what was described as a “housing cooperative.” According to promotional materials, these funds were intended for various investments, with a significant portion earmarked for real estate. However, the allegations state that MCU did not possess the necessary real property or the capital to secure it for the thousands of investors who purchased memberships. Instead, investor funds were deposited into a managed brokerage account invested in a mutual fund and a separate checking account. These funds were then reportedly used to cover administrative costs, including the salaries of the settling parties. Contrary to promises of transparency and investor input in financial decisions, the settling parties allegedly initiated transactions from the checking account without investor approval. Redden served as Treasurer until December 2024.

The settlement mandates that investors will receive approximately $414 per membership, representing over 80% of their initial investment, from the remaining funds in MCU’s accounts. The settling parties have also agreed to pay a $50,000 civil penalty to the Securities Division. Joseph Redden, facing potential penalties under the order to show cause, could be assessed a $5,000 civil penalty for each violation of the Securities Act. Attorney General Brown commended the efforts of Assistant Securities Commissioner Katharine Weiskittel, Assistant Attorney General Ali Pearson, and Chief Investigator Joshua Schaefer for their work on this case.

Article by Mel Anara, based upon information from the Maryland Attorney General’s Office

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