Fund alleges $700K fraud in unregistered senior living securities scheme

A Wyoming investment fund claims it lost $700,000 to an Illinois senior living operator who allegedly sold unregistered securities backed by falsified financial statements. 

Open Range Capital Fund 1 LLC filed suit November 12 in federal court in Illinois against Brandon Schwab and his firms, Shepherd Capital LLC and Shepherd Capital WI LLC, alleging securities fraud and breach of contract. 

Schwab advertises himself as operating a Boutique Senior Living Fund through his website boutiqueseniorlivingfund.com and regularly appears and speaks on podcasts regarding his senior living funds, according to the filing. The case involves two Wisconsin projects—assisted living and memory care facilities in Cottage Grove and Elkhorn—that Schwab began pitching to investors in May 2024. 

During a June 6, 2024 presentation, Schwab offered 10% equity in both projects, the filing states. He told investors the Cottage Grove 15-bed assisted living unit had a current value of $2.5 million with a stabilized value of $5.1 million, with an average resident count of 13.5 and average profit margin at 90% occupancy of $33,467 per month. For the 20-bed memory care facility, he represented a current value of $2.5 million with a stabilized value of $6.7 million, an average resident count of 18, and average profit margin at 90% occupancy of $44,622 per month. He claimed both properties had been purchased in December 2023 for $1.5 million each, with expected rehab costs of $100,000. 

Open Range wired $400,000 for the Cottage Grove deal between June and August 2024, and another $300,000 for the Elkhorn facility in late August, the filing states. The investments were structured as promissory notes paying 10% annual interest in quarterly installments, with Schwab personally guaranteeing repayment. The Cottage Grove note was dated August 5, 2024, requiring quarterly payments of approximately $10,000 beginning in October 2024 through August 2029. The Elkhorn note was dated August 9, 2024, requiring quarterly payments of approximately $7,500 on the same schedule. 

The financial reality proved starkly different, the fund alleges. Schwab did not own the properties—he held only options to purchase them. The representation that the facilities were purchased in December 2023 for $1.5 million was therefore untrue, the filing states. More problematic, his firms lacked valid operating licenses for the facilities, preventing them from collecting resident fees. The property owners retained the operational licenses and refused to turn over income generated by residents even though defendants were purportedly managing the facilities. 

By December 30, 2024, the Cottage Grove assisted living unit housed just six residents instead of approximately 13.5, while the memory care facility had five residents rather than 18. A year-end profit and loss statement provided on December 30, 2024 showed a net operating income of negative $112,848.50 for 2024—a negative swing of $222,409.65 from the previously represented amount of $109,561.15, according to the filing. 

The Elkhorn facility showed similar problems. Schwab did not own the facility located at 450 E. Geneva Street but had an option to purchase it under an undisclosed lease, the filing states. His firms lacked a valid operating license there as well. A December 30, 2024 profit and loss statement showed net operating income of $6,745.82 for 2024, a negative swing of $130,211.37 from the previously represented amount of $136,957.19. 

After making two interest payments, Schwab's firms stopped paying, the filing states. They failed to make quarterly payments due in Quarter 4 of 2024 and Quarter 2 of 2025 for both notes. Open Range sent a notice of default on August 11, 2025. On September 11, 2025, the fund accelerated and demanded immediate repayment. As of August 11, 2025, the outstanding and unpaid principal and interest totaled $422,000 for Cottage Grove and $317,000 for Elkhorn. The defendants have failed and refused to pay the outstanding balance or any portion thereof, according to the filing. 

The filing raises broader regulatory concerns. None of the defendants are currently registered or have ever registered as broker-dealers with the SEC or with the State of Illinois, and none have ever registered their proffered securities with either authority, the fund alleges. Schwab at no time provided the fund with a private placement memorandum, subscription agreement, risk disclosure, or other financial disclosures. The fund was at no time vetted to be either an accredited or sophisticated investor. 

Schwab also allegedly misrepresented his litigation history. In an April 9, 2025 email to the fund's representatives, he wrote that a lawsuit with a property owner was his "first-ever lawsuit." This statement was untrue, the filing states. Court records show at least four prior federal cases: Bilello v. Schwab, filed April 5, 2023; Igney v. Schwab, filed December 11, 2023; Martin v. Shepherd Capital LLC, filed July 16, 2024; and Momapes LLC v. Shepherd Capital LLC Harvard, filed August 30, 2024. In McHenry County, Illinois alone, defendants have been involved in at least 27 lawsuits predating April 9, 2025. Schwab filed for Chapter 7 bankruptcy on September 20, 2010. 

The case includes seventeen counts spanning federal and state securities violations, consumer fraud, breach of contract, negligent misrepresentation, and breach of personal guarantees. Open Range seeks return of all capital, disgorgement of gains, compensatory and statutory damages, 10% pre-judgment interest, post-judgment interest at the highest rate allowable by law, and injunctive relief to prevent further securities violations. The fund also seeks judicial dissolution of Shepherd Capital WI LLC. 

The case is Open Range Capital Fund 1 LLC v. Brandon Schwab, Shepherd Capital LLC, and Shepherd Capital WI LLC, Case No. 1:25-CV-13898, in the U.S. District Court for the Northern District of Illinois.