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MELISSA R. HODGMAN
Email: HodgmanM@sec.gov
J. LEE BUCK, II
Email: BuckJL@sec.gov
ALFRED C. TIERNEY
Email: TierneyA@sec.gov
BENJAMIN D. BRUTLAG
Email: BrutlagB@sec.gov
RICHARD HONG (NY Attorney Reg. No. 2503589)
Email: HongR@sec.gov
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
100 F Street N.E.
Washington, DC 20549
Telephone: (212) 336-0956 (Hong)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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SECURITIES AND EXCHANGE
COMMISSION,

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Plaintiff,
vs.

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DESARROLLADORA
HOMEX S.A.B. DE C.V.,

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Defendant

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Plaintiff Securities and Exchange Commission (“SEC” or “Commission”)
alleges and states as follows:
SUMMARY

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) Case No.
)
)
)
) COMPLAINT FOR VIOLATIONS OF
) THE FEDERAL SECURITIES LAWS
)
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)
)

1.

This case is about a massive financial fraud perpetrated by

Desarrolladora Homex, S.A.B. de C.V. (“Homex” or “the Company”), which is

28 headquartered in Culiacán, Sinaloa, and formerly known as Mexico’s largest

 1 homebuilder. Homex’s securities have, at all relevant times, been listed or quoted
2 in the United States. From at least 2010 through 2013 (the “Relevant Period”), and
3 acting, with scienter, through certain of its then senior officers and employees,
4 Homex improperly recognized billions of dollars of revenue. In particular, Homex
5 systematically and fraudulently reported revenue from the sale of tens of thousands
6 of homes annually that it had neither built nor sold. Homex personnel perpetrated
7 this fraud by manually entering false information into its internal accounting and
8 financial systems.
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2.
Homex’s resulting overstatements of its revenue and the number of
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residential units sold, across its annual reports filed with the Commission during
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the Relevant Period, totaled at least MXN $44 billion (USD $3.3 billion), or 355%,
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and at least 100,000 units, or 317%, respectively.
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3.
During the Relevant Period, U.S.-based individuals and entities
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invested hundreds of millions of dollars in Homex, whose securities were, until
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April 2014, dually listed on the New York Stock Exchange (“NYSE”) and the
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17 Mexican Stock Exchange (“BMV”). The U.S.-based investments in Homex during
18 the Relevant Period included a $400 million bond issuance that Homex made
19 directly to U.S. investors in February 2012. In February 2014, the BMV suspended
20 trading in Homex’s common shares due to unusual stock price movements and the
21 Company’s failure to timely file a required quarterly financial statement. In April
22 2014, Homex filed for the Mexican counterpart to bankruptcy reorganization. In
23 the aftermath of that filing, Homex’s securities were delisted from the NYSE (and
24 were thereafter quoted for U.S. trading on the OTC Link operated by OTC Markets
25 Group, Inc. (“OTC Link”)), and the value of U.S.-based investments in Homex was
26 virtually wiped out.
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 1

4.

By engaging in this fraud, Homex violated Section 17(a) of the

2 Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)] and Sections 10(b),
3 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934
4 (“Exchange Act”) [15 U.S.C. §§ 78j(b), 78m(a), and 78m(b)(2)(A) and (B)], and
5 Exchange Act Rules 10b-5, 12b-20, 13a-1, and 13a-16 [17 C.F.R. §§ 240.10b-5,
6 12b-20, 13a-1 and 13a-16]. Unless restrained and enjoined by this Court, Homex
7 is likely to commit such violations in the future.
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JURISDICTION AND VENUE
5.

This Court has jurisdiction over this action pursuant to Sections 20(b),

20(d)(1), and 22 of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d)(1), and 77v] and
Sections 21(d), 21(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e),
and 78aa].
6.

Homex, directly or indirectly, made use of the means or

instrumentalities of interstate commerce or the mails, or a facility of a national
securities exchange in connection with the transactions, acts, practices, and courses

17 of business alleged in this complaint.
7.
Venue is proper in this District pursuant to Section 22(a) of the
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19 Securities Act [15 U.S.C. § 77v(a)] and Section 27(a) of the Exchange Act [15
20 U.S.C. § 78aa(a)]. During the Relevant Period, certain of Homex’s acts, practices,
21 and courses of business alleged in this Complaint occurred within this District.
DEFENDANT

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8.

Desarrolladora Homex, S.A.B. de C.V., a Mexican corporation

24 headquartered in Culiacán, Sinaloa, Mexico, has at all relevant times been engaged
25 in the development, construction, and sale of affordable and middle-income
26 housing in Mexico. From approximately 2004 through 2014, Homex’s stock, in
27 the form of American Depositary Shares (“ADSs”), was listed and publicly traded
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 1 on the NYSE under the ticker “HXM.” In May 2014, Homex’s stock was
2 suspended from trading on (and, the following month, delisted from) the NYSE.
3 Thereafter, it was quoted on the OTC Link under the ticker “DHOXQ” and later
4 “DHOXY.” On December 9, 2016, the U.S.-based facility for Homex’s ADSs was
5 terminated. Homex’s ADSs are no longer quoted for trading on the U.S. over-the­
6 counter market, and its foreign ordinary shares currently trade on the grey market
7 under the ticker “DHHXF.” Homex’s common stock continues to trade on the
8 BMV.
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FACTUAL ALLEGATIONS
I.

BACKGROUND

9.

Homex was founded in 1989 in Culiacán, Sinaloa, Mexico, and

incorporated in 1998 under the Mexican Companies Law. During the Relevant
Period, Homex purported to be the largest real estate development company in
Mexico.
10.

Homex was founded by several members of the De Nicolas family,

17 which owned approximately 34% of the Company throughout most of the Relevant
18 Period, until significant sales of the family’s shareholdings in the first half of 2013
19 reduced its percentage ownership to approximately 17% by June 2013. One
20 member of the De Nicolas family, Gerardo de Nicolas, served as Homex’s Chief
21 Executive Officer (“CEO”) during the Relevant Period. In May 2016, following
22 Homex’s public disclosure of the Commission’s investigation, Gerardo de Nicolas
23 stepped down as CEO and board member and was placed on unpaid administrative
24 leave from the Company. For his part, and also in May 2016, Homex’s Chief
25 Financial Officer (“CFO”) throughout the Relevant Period, Carlos Moctezuma,
26 likewise stepped down from the CFO role and was placed on unpaid administrative
27 leave from the Company.
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11.

Homex completed its initial public offering on June 29, 2004;

2 thereafter, its equity securities were dually listed on the NYSE and BMV. In
3 subsequent years, Homex also offered and sold hundreds of millions of dollars in
4 debt securities, including two $250 million issuances, in 2005 and 2009 (maturing
5 in 2015 and 2019, respectively), and a $400 million bond issuance in February
6 2012.
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12.
In 2013, only one year after its last public debt offering, Homex
8 began defaulting on its debt obligations and repeatedly failed timely to file
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quarterly and annual reports with the Commission. Homex eventually filed for
Mexico’s equivalent to bankruptcy reorganization in April 2014. In June 2014,
Homex’s ADSs were delisted from the NYSE (after being suspended from NYSE
trading the previous month) but thereafter continued to be quoted for U.S. trading
on the over-the-counter markets. Homex exited from bankruptcy through a Court
Judgment issued on July 3, 2015, and its Reorganization Plan became effective on
October 23, 2015. Upon request by the Company, on December 9, 2016, the

17 American Depositary Receipt facility for Homex’s ADSs was terminated.
18 Homex’s ADSs are no longer quoted for U.S. trading on the over-the-counter
19 market. Homex’s common stock continues to trade on the BMV.
II.
RELEVANT ACCOUNTING POLICIES
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13.

For its fiscal years 2010 and 2011, Homex prepared its financial

22 statements in accordance with Mexican Financial Reporting Standards (“MFRS”),
23 and, for its fiscal year 2012, Homex prepared its financial statements in accordance
24 with International Financial Reporting Standards (“IFRS”). For purposes of its
25 annual 2010 and 2011 Form 20-F filing with the Commission, Homex reconciled
26 its consolidated reports of net income, including revenues, and its consolidated
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 1 stockholder’s equity to U.S. Generally Accepted Accounting Principles (“U.S.
2 GAAP”).
3

14.

In its annual filings on Form 20-F for the fiscal years 2010, 2011, and

4 2012, Homex stated that revenues from the Company’s home sales were
5 recognized only upon the fulfillment of certain conditions, including “control” of
6 the home having been transferred to the homebuyer and it having become probable
7 that the Company will “receive the economic benefits associated with the
8 transaction.”
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15. Homex’s internal accounting policies and procedures further provided
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that revenue could be recognized only for homes that attained “Operada” status,
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which likewise required the fulfillment of various conditions, including
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certification that the home had become habitable (i.e., that the home had been
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built) and that transfer of title to the buyer had occurred.
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16. Accordingly, throughout the Relevant Period, under U.S. GAAP,
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IFRS, and Homex’s own disclosures and internal policies and procedures, a home
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17 had to be substantially constructed before Homex could meet the criteria above and
18 thus potentially recognize revenue for its sale.
III.  HOMEX’S INTERNAL SYSTEMS, RECORDKEEPING,
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FINANCIAL REPORTING PROCESS, AND ACCOUNTING
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CONTROLS
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17. Throughout the Relevant Period, as part of normal operations, Homex
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employees entered operational and financial data concerning, among other things,
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the construction and sale of homes, into an internal system called the “Sistema
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Integral de Administración” (the “SIA” system). The SIA system in turn was
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26 composed of several modules – e.g., the Operations, Sales, Construction and
27 Treasury Modules – each dedicated to the specific type of data entered therein.
28 During the course of day-to-day operations, hundreds, if not thousands, of Homex
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 1 employees across Mexico entered data into SIA’s Construction, Sales and
2 Operations Modules that accurately reflected the true progress of home
3 construction, sales, and revenue collection, respectively. Unlike other modules,
4 which tracked information down to the specific house level, the Treasury Module
5 tracked revenue from home sales only at the project level, i.e., it did not keep data
6 concerning sales of specific homes. Furthermore, unlike other modules, access to
7 SIA’s Treasury Module was limited to certain persons in Homex’s headquarters,
8 including its then-CEO, CFO, Controller, and a tightly limited number of their
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subordinates (hereinafter collectively “Headquarters Financial Reporting
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Personnel”).
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18. Homex’s Headquarters Financial Reporting Personnel used another
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internal accounting and financial reporting system called “Contpaq,” a commercial
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software system used to process accounting information and consolidate financial
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statements.
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19. Homex’s CEO strictly limited Homex employees’ access to
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17 information in Homex’s internal systems, including SIA and Contpaq. Although
18 employees in the field could, for example, input and view data in SIA’s Sales,
19 Construction and Operations Modules, they could not input or view data
20 concerning projects or regions outside their own. Nor could employees in the field
21 access Contpaq or, as noted above, the SIA system’s Treasury Module. Only
22 Homex’s Headquarters Financial Reporting Personnel had access to all relevant
23 types of information across Homex’s various systems.
24

20.

At the end of a financial reporting period, Homex’s financial reporting

25 procedures provided that Homex’s Headquarters Financial Reporting Personnel
26 were to upload from the SIA system into Contpaq financial and operational
27 information accurately captured within SIA’s various modules during the relevant
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 1 reporting period, including home sale revenue information entered into the SIA
2 Sales and Operations Modules. Once uploaded to Contpaq, that information was
3 then to be consolidated into financial statements used for financial reporting
4 purposes, including Homex’s annual filings with the Commission on Form 20-F.
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IV.  HOMEX’S FRAUDULENT ACCOUNTING SCHEME
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A. 

Homex Materially Misstated Revenues Associated With
Home Sales

21.

Homex and certain of its Headquarters Financial Reporting Personnel

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knowingly and intentionally engaged in a scheme to materially overstate Homex’s
revenues, homes sold, and other related financial items during the Relevant Period.
In just its 2010 through 2012 fiscal years, Homex overstated revenue by at least
MXN $44 billion (USD $3.3 billion), or 355% of revenues from actual home sales,
and overstated its number of units sold by over 100,000 units, or 317% of actual
units sold.
22.

Specifically, the scheme resulted in Homex materially overstating at

17 least the following revenues and number of units sold:
OVERSTATED REVENUES AND UNITS SOLD

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FISCAL YEARS 2010-2012

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(Revenue Figures in Millions of MXN $)
FY 2010

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FY 2011

FY 2012

TOTAL 2010-2012

Revenue

Unit Sales

Revenue

Unit
Sales

Revenue

Unit
Sales

Revenue

Unit
Sales

As Reported on
Form 20-F

$18,465

44,347

$20,210

52,486

$18,809

42,945

$57,484

139,778

Actual Results

$6,456

16,977

$3,981

11,006

$2,200

5,536

$12,637

33,519

Revenue / Units
Overstated

$12,009

27,370

$16,229

41,480

$16,609

37,409

$44,847

106,259

% Overstatement

186%

161%

408%

377%

755%

676%

355%

317%

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23.

Homex made the aforementioned material misstatements publicly in

(i) numerous filings with the Commission, including its annual reports on Form 20­
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 1 F for its 2010 through 2012 fiscal years as well as all of the financial reports it
2 furnished on Form 6-K during the Relevant Period; and (ii) in its public offering
3 documents concerning its February 2012 issuance of $400 million in corporate
4 bonds.
5
24.

In connection with each of the aforementioned annual reports on

6 Form 20-F that Homex filed with the Commission throughout the Relevant Period,
7 Homex’s then CEO and CFO each signed certifications indicating that each had
8 reviewed the Form 20-F, and that, among other things, the financial statements and
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other financial information included therein fairly presented in all material aspects
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the financial condition, results of operations and cash flows of Homex.
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B.  Homex Materially Misstated Revenues Associated with Home
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Sales By Manually Entering Fraudulent Top-Line Revenue and
Cost Entries Concerning Fictitious Home Sales
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25.

Homex’s Headquarters Financial Reporting Personnel intentionally

15 and knowingly uploaded false information into the Company’s internal reporting
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and accounting systems in order to perpetrate the fictitious revenue scheme.
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Specifically, contrary to the Company’s internal controls, policies and procedures,
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the Headquarters Financial Reporting Personnel did not upload into Contpaq and,
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for financial reporting purposes, did not use information accurately captured within
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SIA’s Construction, Sales and Operations Modules. Rather, the Headquarters
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Financial Reporting Personnel manually entered false revenue – including tens of
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thousands of fictitious home sales – into SIA’s Treasury Module. Subsequently,
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24 only the false data was uploaded into Contpaq for financial reporting purposes.
25

26.

Certain of Homex’s Headquarters Financial Reporting Personnel also

26 maintained a spreadsheet that tracked the fictitious home sales that had been
27 manually entered into SIA’s Treasury Module. They used this spreadsheet, which
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 1 was maintained outside of Homex’s internal systems, to ensure that fictitious
2 revenue from manually entered home sales was not double-booked.
3

27.

In order to conceal the enormous level of manually-entered fictitious

4 revenue associated with tens-of-thousands of unbuilt homes, certain of Homex’s
5 Headquarters Financial Reporting Personnel also manually entered corresponding
6 false cost-of-sales and inventory information into Contpaq. These manual entries
7 were necessary because, when fictitious revenue was uploaded, the expected cost8 of-sales and inventory entries corresponding to the revenue were not reflected in
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the Contpaq system as they were not entered into the other SIA modules in the
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normal course of Homex’s operations. As a result of the manual entries, the
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information used for financial reporting radically inflated the data captured within
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SIA’s Construction, Sales and Operations modules.
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C.
Homex Recognized Revenue for Unbuilt Homes
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28. By means of the scheme detailed above, Homex claimed to investors
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that it had built and sold thousands of homes that, in fact, it had not built. Homex’s
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17 Real Estate Project 877 (named “Benevento” and located in the Mexican state of
18 Guanajuato) is illustrative. During the investigation leading to the filing of this
19 action, Homex’s Relevant Period senior management identified Benevento to the
20 SEC as one of the Company’s top ten real estate development projects by revenue.
21 Homex’s Relevant Period senior management also provided Benevento’s project
22 plan (identifying the location, block and lot number of each planned housing unit),
23 and details (by block, lot number, sale price and sale date) of the Benevento sales
24 the Company had included in the financial statements it had filed with the SEC on
25 Form 20-F. These documents reflected that, by December 31, 2011, all of
26 Benevento’s planned units had been built and sold, and that Homex had recognized
27 and reported revenue for the same. Satellite images taken in March 2012,
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 1 however, reveal that hundreds of those very same Benevento units remained
2 unbuilt. (See Exhibit 1 attached hereto.)
3

D.
Homex “Factored” Fictitious Accounts Receivable to Maintain Its
4 Accounting Fraud Scheme
5

29.

When Homex actually did build and sell a home, the purchase price it

6 received was typically financed by a mortgage loan from one of two large Mexican
7 Government-backed lending institutions. In such cases, Homex typically received
8 the loan proceeds from the Government-backed lender within a period of weeks—
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usually less than a month—following the issuance of title to the home. During the
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period it awaited those funds, Homex carried the expected payment from the lender
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on its books as an account receivable.
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30. The vast majority of Homex’s accounts receivable during the
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Relevant Period were fictitious because they arose from fictitious home sales.
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31. In order to immediately monetize both its actual and its fictitious
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accounts receivable, Homex, throughout the Relevant Period, entered into financial
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17 arrangements with various Mexican banks whereby the parties agreed to “factor”
18 specified Homex accounts receivable. In particular, Homex and these banks
19 entered into written agreements providing that the banks would make a discounted
20 up-front payment to Homex, in exchange for the right to receive the funds
21 purportedly comprising the specified accounts receivable in the future. Homex’s
22 then senior-most executives – specifically its then CEO and CFO – signed these
23 agreements on Homex’s behalf.
24

32.

During the Relevant Period, Homex entered into such factoring

25 agreements with at least thirteen (13) Mexican banks, concerning at least MXN
26 $97 billion (approximately USD $7.5 billion) in Homex’s purported accounts
27 receivable. A substantial portion of those factoring agreements, concerning a
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 1 significant portion (at least MXN $78 billion, or USD $6 billion) of the “factored”
2 accounts receivable, by their terms, effectively made Homex the guarantor of
3 payment. That is, Homex remained responsible, under these particular factoring
4 agreements, to refund to the bank any accounts receivable that the bank was unable
5 to collect. Because Homex guaranteed payment of the factored accounts
6 receivable and thus remained liable to the banks for the amount of the factored
7 accounts receivable, the relevant accounting principles required Homex to enter a
8 corresponding liability to any cash it received under these factoring agreements.
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Homex’s books and records indicate that, instead, it failed to do so, thereby
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materially distorting internal books and records and, ultimately, its financial
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statements.
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33. Homex consistently entered into new factoring agreements to
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perpetuate its fraudulent scheme. As discussed above, Homex was often required
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to repay banks for any uncollectable accounts receivable. Because Homex’s
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revenues were largely fictitious, it lacked cash from legitimate operations to meet
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17 these repayment obligations. Homex could therefore meet its repayment
18 obligations only by entering into new agreements to factor additional accounts
19 receivable, the vast majority of which Homex knew were also fictitious. Homex
20 repeated this cycle of fraud continually, in “check-kiting” fashion, throughout the
21 Relevant Period.
22

34.

Homex also made material misstatements and omissions in its annual

23 filings with the Commission on Form 20-F concerning both the nature and the
24 extent of its factoring arrangements. Specifically, Homex’s Form 20-Fs during the
25 Relevant Period disclosed only a single accounts-receivable factoring arrangement,
26 which lacked any guarantor-like obligation on Homex’s part. As discussed above,
27 and as Homex (including its then senior-most executives) knew at the time,
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 1 however, Homex in fact had accounts-receivable factoring arrangements with at
2 least thirteen (13) banks concerning at least MXN $97 billion (USD $7.5 billion) in
3 supposed accounts receivable, and Homex was contractually obligated to pay those
4 banks at least 80% of the accounts receivable encompassed by these agreements in
5 the event the banks were unable to collect them.
6

E.
Homex Continued to Engage in Fraudulent Accounting During
7 the Mexican Bankruptcy Proceedings and the Commission’s Investigation
Mexican Bankruptcy Proceedings
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35.

By no later than June 2012, Homex was aware of the SEC’s

investigation that led to the filing of this action. During the latter half of 2013, as
Homex prepared to file for the bankruptcy process in Mexico and prior to signing
any restructuring agreement with its creditors, Homex recorded a MXN $7 billion
allowance for “doubtful” accounts, i.e., Homex estimated that approximately MXN
$7 billion in its outstanding accounts receivable may not be collected in the future.
Through its then senior-most executives, however, Homex well knew at the time
that collection of most, if not all, of the accounts receivable encompassed by the
allowance it recorded were not merely “doubtful,” but, in fact, could never be

19 collected, because they were from fictitious home sales.
36. Also in 2013, Homex recorded an approximately MXN $30 billion
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21 reserve for inventory, i.e., it reserved for an estimated MXN $30 billion potential
22 loss associated with inventory it might not sell. Through its then senior-most
23 executives, however, Homex knew at the time that most if not all of the inventory
24 encompassed by the reserve it recorded was actually fictitious inventory booked in
25 connection with fictitious home construction. Accordingly, Homex knew this
26 inventory would not merely potentially go unsold, but, in fact, could never be sold.
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37.

Through its senior management and executives, Homex recorded the

2 aforementioned doubtful-accounts and inventory reserves in lieu of immediately
3 disclosing its non-existent accounts receivable and inventory, and restating its
4 financials. By recording these reserves, Homex sought to create a false appearance
5 of conscientiousness to investors, to the SEC, and to Homex’s creditors, the latter
6 of whom ultimately agreed to convert their claims against Homex to equity in the
7 Company.
8

The SEC’s Investigation

9
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38.

During the Commission’s investigation leading to the filing of this

11 action, and continuing until Homex’s then-CEO and CFO were placed on unpaid
12 administrative leave in May 2016, Homex failed to correct, restate, or even
13 disclose any concerns as to the reliability of the Company’s financial statements
14 included in its SEC filings.
15
CLAIMS FOR RELIEF

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17

FIRST CLAIM FOR RELIEF

(Violations of Section 17(a) of the Securities Act) 


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19

39.

20 reference.
21
40.

Paragraphs 1 through 38 are realleged and incorporated herein by

By engaging in the conduct alleged above, Homex, directly or

22 indirectly, knowingly, recklessly or negligently, by use of the means or instruments
23
of transportation or communication in interstate commerce or of the mails, in the
24
offer or sale of Homex securities: (a) employed devices, schemes, or artifices to
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defraud; (b) obtained money or property by means of untrue statements of material
26
facts or omissions of material facts necessary in order to make the statements
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made, in light of the circumstances under which they were made, not misleading;
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 1 or (c) engaged in transactions, practices, or courses of business which operated or
2 would have operated as a fraud or deceit upon the purchasers of Homex securities.
3

41.

By reason of the foregoing, Homex violated, and unless restrained

4 will violate, Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].
5
SECOND CLAIM FOR RELIEF

(Violations of Section 10(b) of the

6
Exchange Act and Exchange Act Rule 10b-5 Thereunder)

7
8

42.

Paragraphs 1 through 41 are realleged and incorporated herein by

9 reference.
10

43.

By engaging in the conduct alleged above, Homex, directly or

11 indirectly, by use of the means or instrumentalities of interstate commerce, or of
12 the mails, or of any facility of a national exchange, in connection with the purchase
13 or sale of Homex securities, knowingly or recklessly: (a) employed devices,
14 schemes, or artifices to defraud; (b) made untrue statements of material facts or
15 omitted to state material facts necessary to make the statements made, in the light
16
of the circumstances under which they were made, not misleading; or (c) engaged
17
in acts, practices, or courses of business which operated or would have operated as
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a fraud or deceit upon any person.
19
44. By reason of the foregoing, Homex violated, and unless restrained
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will violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Exchange
21
Act Rule 10b-5 [17 C.F.R. § 240.10b-5].
22
THIRD CLAIM FOR RELIEF

23
(Violation of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the 

24
Exchange Act and Rules 12b-20, 13a-1, and 13a-16 Thereunder)

25
26
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45.

Paragraphs 1 through 44 are realleged and incorporated herein by

reference.

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46.

Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-16

2 thereunder require a foreign private issuer to file with or furnish to the Commission
3 information, documents, and annual and other reports as the Commission may
4 require. Rule 12b-20 requires that these reports contain such further material
5 information as is necessary to make the required statements in the reports not
6 misleading.
7
47. Section 13(b)(2)(A) of the Exchange Act requires an issuer to make
8 and keep books, records, and accounts which, in reasonable detail, accurately and
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fairly reflect the transactions and dispositions of its assets.
48.

Section 13(b)(2)(B) of the Exchange Act requires an issuer to devise

and maintain a system of internal accounting controls sufficient to provide
reasonable assurances that its financial statements are prepared in conformity with
GAAP or any other criteria applicable to such statements.
49.

By engaging in the conduct alleged above, Homex violated Sections

13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1,

17 and 13a-16 thereunder.
50. By reason of the foregoing, Homex violated, and unless restrained
18
19 will violate, violated Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange
20 Act and Rules 12b-20, 13a-1, and 13a-16 thereunder [15 U.S.C. §§ 78m(a);
21 78m(b)(2)(A); and 78m(b)(2)(B)] and Exchange Act Rules 12b-20, 13a-1, and 13a­
22 16 thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-1, and 240.13a-16].
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PRAYER FOR RELIEF
The Commission respectfully requests that the Court enter an Order:
(i)

Permanently restraining and enjoining Homex from violating, directly

or indirectly, Section 17(a) of the Securities Act and Sections 10(b), 13(a),

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 1 13(b)(2)(A), and 13(b)(2)(B) the Exchange Act, and Exchange Act Rules 10b-5,
2 12b-20, 13a-1, and 13a-16; and
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(ii)

Granting such other relief as the Court deems just and appropriate.

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Dated: March 3, 2017

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Respectfully submitted,
/s/ Richard Hong______________________
RICHARD HONG
Attorney for Plaintiff
Securities and Exchange Commission

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 EXHIBIT 1


Fig. 1: Benevento Project Plan

Fig. 2: March 12, 2012, Benevento satellite image  Fig. 3: Colored highlighting reflects Benevento
housing units which Homex claimed to have built
and sold, and for which it had recorded sales and
reported revenue in 2009 (pink), 2010 (green), and
2011 (blue).