A federal investigation has led American Ventures, an Austin-based real estate developer, to request a delay from the San Marcos City Council on a final vote regarding its proposed $500 million mixed-use project. The company made this request after disclosing in August that it is under investigation by the Securities and Exchange Commission (SEC).
The SEC probe involves questioning current and former employees of American Ventures, as well as investors, about the company’s business practices. The firm had been seeking taxpayer-funded incentives for the 101-acre development by proposing the creation of a public improvement district on land near East McCarty Lane and Rattler Road in San Marcos.
The project was planned to unfold over three phases, with completion expected by 2031. Estimates suggest it could generate $66.1 million in sales and property taxes for Hays County and $145 million in various taxes for San Marcos. In addition to this development, American Ventures also has a deal for a 60-acre mixed-use retail project with the city of Elgin.
No charges have been filed against American Ventures or its CEO, Shravan Parsi. However, sources indicate that interviews related to the investigation have been ongoing since October of last year. Federal investigators are reportedly focusing on how investor funds were used—specifically whether any were used for personal expenses—and whether fees charged to investors matched what they were told. Questions have also arisen about political donations potentially made with investor funds.
Christopher Yust, an associate professor of accounting at Texas A&M University, commented: “Businesses have some leeway with how and what they use funding for from investors, so long as those practices are clearly stipulated to them.”
SEC documents show that since July 2023, Parsi and American Ventures raised $36 million from 236 investors. These funds were allocated toward purchasing developable land in locations such as Elgin and San Marcos, a redevelopment project in Dallas, and land along South Congress Avenue in Austin. Investigators are looking into whether “double closings”—where one entity buys land then transfers it to another—were used during these transactions and if investors were informed about them.
American Ventures’ past projects include The Draper at 217 Garland Avenue in Garland near Dallas—a 155-unit development financed through a HUD loan with a 2.96 percent interest rate over forty years.
It remains uncertain whether the San Marcos project will proceed or be canceled entirely. If scrapped, plans for nearly 1,200 multifamily units, 44 townhomes, 120 build-to-rent homes, a hotel with 130 rooms, almost 145,000 square feet of office and retail space, and an option for the city to purchase acreage for a future baseball stadium would be left unfulfilled.
