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South Florida fraud case revealed 8,400 defrauded investors

On Behalf of | Dec 27, 2017 | Business Torts |

The Securities and Exchange Commission (SEC) has accused a former Boca Raton company and a California investor of running a $1.2 billion Ponzi scheme. The SEC claims the scheme defrauded 8,400 investors, many of whom were senior citizens. According to the complaint, after the fraud collapsed, investors were owed more than $960 million in outstanding principal. Over a quarter of the investors placed their retirement funds into the scheme.

The fraud claims are based on short-term loans to third-party owners of commercial properties. The scheme promised investors annual returns of 5 to 10 percent on loans that were given at rates of 11 to 15 percent. However, the complaint says that the vast majority of the companies to whom loans were given were owned by the California investor who helped perpetrate the fraud. He, in turned, pocketed $21 million of the investors’ money.

As the criminal matter unfolds, the defendants’ assets will be identified, located and collected. The court, in a concurrent civil matter, will appoint a receiver to assist in this process, as well as to manage the assets until all criminal and civil matters are resolved. If the defendants are found guilty of the alleged fraud, a court will order the appointed receiver to distribute the assets in an attempt to help investors recoup some of their losses.

When a court appoints a receiver in a fraud case, like this recent Ponzi scheme, it looks for an attorney or law firm with the right kind of experience. Receivership experience and a proven track record in complex business litigation are important. The right receiver can make a difference in resolving the financial issues that swirl around massive fraud cases.

Source: Miami Herald, “This Ponzi scheme moved $1.2 billion as it defrauded 8,400 investors, the SEC says“, David J. Neal, Dec. 22, 2017