Pace Morby Lawsuit: The Arizona Subject-To Case Explained

Pace Morby is not named as a defendant in any confirmed lawsuit. The Pace Morby lawsuit that circulates online usually refers to a March 2025 civil case filed by Arizona Attorney General Kris Mayes against nearly 70 individuals and companies accused of an equity-stripping scheme that used fraudulent “subject-to” real estate transactions. Morby, the country’s most visible promoter of subject-to investing, is not among the defendants and has not been linked by any court record or news report to the operation. His name attaches to the case only because the alleged fraud used the same type of deal structure he teaches.

The Arizona Case Being Confused With a Morby Lawsuit

On March 12, 2025, Attorney General Mayes filed State of Arizona v. Cameron Jones et al. in Maricopa County Superior Court. The complaint names Cameron Jones and Samuel Sutton as the alleged leaders of the scheme, along with their companies Gazelle Investors and Magnum Financial, plus dozens of title companies, attorneys, and law firms accused of processing the deals.¹

The suit brings eight claims under the Arizona Consumer Fraud Act and three racketeering claims. Mayes is seeking $10,000 per instance of consumer fraud, dissolution of the front companies, and a permanent ban on the defendants doing real estate business in Arizona.² Pace Morby is not listed. Neither is any Morby entity.

What the Defendants Are Alleged to Have Done

According to the complaint, the defendants scraped county recorder websites for foreclosure notices, filtered for homes with significant equity, and sent “door knockers” to the owners. Some allegedly posed as foreclosure relief specialists. Others claimed to represent a fabricated charity called “Arizona’s Helping Hands.”¹

Once they had a homeowner’s trust, the defendants allegedly pushed them into contracts that transferred the property for a fraction of its value. Mayes cited cases where homeowners received $5,000 or $10,000 for houses worth $500,000 to $800,000.³ The complaint alleges the operators also filed bankruptcy petitions on behalf of homeowners, sometimes without the owners’ knowledge, to stall foreclosure auctions while taking possession themselves. Shell companies were then used to flip the homes rapidly, and in some cases the operators sued the original owners to evict them.²

Mayes estimated that at least hundreds of homes are involved in this case, and that similar equity-stripping fraud statewide may have affected tens of thousands of Arizona homeowners.³

Why Morby’s Name Comes Up

The alleged scheme used subject-to transactions. In a subject-to deal, a buyer takes title to a property while the seller’s existing mortgage stays in the seller’s name; the buyer just takes over the payments without formally assuming the loan.⁴ The Arizona complaint alleges the defendants used these agreements to mislead homeowners into thinking they had been removed from their mortgages, when in fact their names remained on the loans.⁵

Morby is the strategy’s best-known American proponent. A former general contractor, he claims to have acquired over $450 million in real estate through creative financing. He runs the SubTo mentorship program and co-hosted the A&E show Triple Digit Flip.⁶ Because his brand is built on subject-to, coverage of the Arizona case tends to loop back to him. A U.S. News piece on the legal risks of subject-to deals cited State of Arizona v. Cameron Jones as an example of how the structure can be used predatorily, noting the firm used illegal documents and failed to keep up payments.⁴

None of this makes Morby a party to the case. It puts his teaching method in the same conversation as the alleged fraud, which is why the search leads people to a lawsuit he isn’t in.

The Underlying Risks of Subject-To Deals

Most mortgages contain a due-on-sale clause that lets the lender demand full repayment if the property changes hands. A subject-to transfer technically triggers that clause, though lenders often don’t act on it as long as payments keep coming. If the buyer stops paying, the seller faces foreclosure and credit damage on a home they no longer live in.⁴ The deals also skip the usual lender-side safeguards, and the original borrower keeps legal liability on the loan.

Unverified Rumors and Complaints About SubTo

Separate from the AG case, there are online rumors of a lawsuit against Morby directly. A 2025 BiggerPockets thread titled “Pace Morby being sued for Sub to?” reported that one user had heard secondhand about a supposed class action involving Morby and multifamily sellers. No one in the discussion could confirm the case existed. No case number or filing was ever produced. Other forum members suggested the rumor came from disgruntled students or reflected the ordinary litigation churn around large real estate operators.⁷

The Better Business Bureau profile for SubTo shows nine complaints over three years. Most concern refund disputes, unexpected charges, and dissatisfaction with the mentorship. Several complainants said non-refundable payment terms weren’t clearly disclosed at enrollment. One alleged that a $2,997 loan was processed in their name through a third-party lender without consent. The company responded to several complaints by offering refunds or reassigning advisors.⁸

A separate BiggerPockets review thread on the SubTo and Gator programs split sharply. One user praised the community and reported roughly 13,000 students. Another alleged that Morby’s Arizona contractor’s license had been revoked and characterized his practices as fraudulent. A third said the sales pitch oversold what the program actually delivered.⁹ None of these accounts has been verified in a court filing.

Federal Regulatory Status

SEC filings for SubTo Fund LLC, a Regulation Crowdfunding offering managed by SquadUp Management LLC (with Morby listed as a manager), contain no record of any federal enforcement action by the SEC, FTC, or CFPB against Morby or his entities. The filings include a standard Bad Actor Disclosure stating the company is not subject to any disqualifications under U.S. securities laws.¹⁰ An updated Form C-AR filed in April 2025 similarly discloses no pending regulatory actions, though it lists standard risk factors about operating in a regulated industry.¹¹

One piece of federal enforcement often surfaces in searches alongside Morby and doesn’t belong to him: an FTC action that produced a $16.7 million judgment against the principals and celebrity endorsers of a different real estate investment scheme involving Nudge LLC, Dean Graziosi, and Scott Yancey. That case has no connection to Pace Morby.¹²

On the public record as it stands, the Arizona lawsuit that fuels the “Pace Morby lawsuit” search targets other people who used the same deal structure he teaches. If a case against Morby personally exists, it hasn’t surfaced in any court filing, regulator action, or verified news report reflected in the available material.

1
Arizona Attorney General. Attorney General Mayes Sues Real Estate Operators and Title Companies for Defrauding Homeowners
2
Regulatory Oversight. Arizona AG Pursues Fraudulent Real Estate Scheme Targeting Alleged Fraudsters, Title Companies, Attorneys and Law Firms
3
AZFamily. Inside Equity-Stripping Scheme That Cost Arizona Homeowners Millions
4
U.S. News & World Report. Is Buying or Selling Subject to a Good Idea
5
My Land Trustee. Subject-to Under Siege by AZ AG
6
PaceMorby.com. Pace Morby Official Website
7
BiggerPockets. Pace Morby Being Sued for Sub To
8
Better Business Bureau. SubTo BBB Complaints
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BiggerPockets. Pace Morby Subto and Gator Review
10
SEC. SubTo Fund LLC Form C Offering
11
Fast EDGAR. SubTo Fund LLC Form C-AR
12
Federal Trade Commission. FTC Suit Leads to $16.7 Million Judgment Against Principals, Celebrity Endorsers of Real Estate Investment Scheme