'MegaFactories' and 600 Units That Weren't Under Contract: S2A Modular Founders Settle SEC Case Over $65 Million Raise

Published Oct. 12, 2026. Case statuses are current as of that date. This article is based only on documents published by the U.S. Securities and Exchange Commission.

Investors in S2A Modular were told to pick a factory. Each "MegaFactory" would build sections of homes and commercial buildings indoors, and each investor's returns would come only from the plant they chose to fund. According to the Securities and Exchange Commission, the money didn't stay where investors put it.

On July 23, 2026, the SEC filed settled charges against Brian Kuzdas and John Rowland, the co-founders of S2A Modular Corp., alleging an offering fraud that raised about $65 million from nearly 350 retail investors nationwide between about April 2018 and January 2025 [1][2].

Important: Kuzdas and Rowland agreed to settle without admitting or denying the SEC's allegations, and the proposed judgments require court approval. The SEC's release does not allege that the business was fake; its allegations concern how investor money was used and what investors were told.

The pitch

The complaint describes S2A's plan: raise money to build and operate MegaFactories across the United States that would manufacture "modular" units, essentially separate sections of a commercial building or residential home, in a controlled indoor environment, then ship them to sites for assembly [2].

According to the SEC, investors were told to choose a specific MegaFactory, and the defendants promised that distributions would be paid only from the profits of that factory. The complaint calls this choice "critical" [2].

What the SEC alleges went wrong

Money moved without investors' knowledge. From May 2021 through December 2022, the SEC alleges, the founders diverted a substantial portion of investor money from the factories investors had chosen to a single facility in Patterson, California. For a time they didn't disclose the shift, and later they pressured investors to "Roll-Up" their investments into a larger entity or risk losing their investments entirely, according to the complaint [2].

Customer demand was overstated. The SEC alleges that from 2020 through 2023 the founders told investors they had more than 600 units under contract, and in 2022 and 2023 claimed even more "on order" without saying the orders weren't binding. In fact, the complaint says, they obtained only about 100 customer contracts by the end of 2024 [1][2]. The complaint adds that production couldn't begin until the Patterson plant received a certificate of occupancy, which didn't happen until January 2024.

Big institutional money was "imminent." From 2022 through early 2025, the founders allegedly told investors that massive institutional investments, including purported billion-dollar raises, were coming. According to the SEC, the talks never got past preliminary discussions, and the founders knew the money couldn't materialize because they needed, but refused, to audit their companies [2].

Investor presentations included webinars, written updates and in-person sessions, the complaint says [2].

The settlement

Without admitting the allegations, Kuzdas and Rowland consented to final judgments, subject to court approval, that would permanently enjoin each of them from violating the antifraud provisions of the Securities Act and Exchange Act, order each to pay a $200,000 civil penalty, and bar each from serving as an officer or director of a public company for two years [1].

The case is SEC v. Brian Kuzdas and John Rowland, No. 5:26-cv-07616, U.S. District Court for the Northern District of California. The release does not mention a parallel criminal case [1].

What "settled, subject to court approval" means

This is a civil case brought by the Securities and Exchange Commission, not a criminal prosecution. The SEC cannot send anyone to prison; it asks a federal judge for orders such as injunctions, repayment of allegedly ill-gotten gains (called disgorgement), interest on that money, civil penalties and industry bars.

In a settled action, the defendant agrees to a proposed judgment without admitting or denying the SEC's allegations. That is not a finding of liability by a court, and it is not a criminal conviction. A proposed judgment also does not take effect until a judge signs it. As of Oct. 12, 2026, we have not confirmed whether the court has entered the judgment described below. If it has, we will update this article.

Red flags to watch for

• "Under contract" or "on order" claims you can't verify. Ask whether orders are binding.
• "Imminent" institutional or billion-dollar funding that never seems to close.
• Companies that won't produce audited financials.
• Pressure to "roll up" or convert your investment under threat of losing it.

What to do if you invested

1. Keep every record: account statements, promissory notes, subscription agreements, emails, texts, wire confirmations and screenshots of websites or videos.
2. Report it to the SEC at sec.gov/tcr.
3. Check who you are dealing with. Before investing, search the person and firm on the SEC's Investor.gov adviser search and FINRA's BrokerCheck.
4. Beware of "recovery" offers. People who lost money in investment frauds are often contacted by scammers who promise to recover it for an upfront fee. Government agencies and court-appointed receivers do not charge victims to file claims.

Case status (as of Oct. 12, 2026)

Defendant	Court	Status as of Oct. 12, 2026	Source
Brian Kuzdas	U.S. District Court, N.D. Cal. (No. 5:26-cv-07616)	Settled SEC civil action filed July 23, 2026, without admitting or denying; proposed $200,000 penalty and 2-year officer/director bar, subject to court approval	[1], [2]
John Rowland	Same	Same terms as Kuzdas; subject to court approval	[1], [2]

Statuses can change. An SEC complaint contains allegations, and a settlement without admitting or denying them is not a finding of wrongdoing.

Sources

1. U.S. Securities and Exchange Commission, Litigation Release No. 26593, "SEC Files Settled Action Against Founders of Modular Construction Startup Alleging $65 Million Offering Fraud," July 24, 2026. https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26593
2. SEC complaint, SEC v. Brian Kuzdas and John Rowland, No. 5:26-cv-07616 (N.D. Cal. filed July 23, 2026). https://www.sec.gov/files/litigation/complaints/2026/comp26593.pdf

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Corrections and updates: If you are named in this article, or represent someone who is, and believe anything here is inaccurate or out of date (including a dismissal, a court ruling on a proposed judgment, or any other change in case status), please contact us at editorandchief@scammers.com. We will review it and update the article promptly.