Doug Cornelius on compliance for private equity real estate
EquiAlt is in the business of snapping up distressed properties in Florida. That takes capital and it raised it through a series of funds through debt offerings. That seems like mismatched cash flow to me. You have to make interest payments on investments in real estate that are not generating cash flow. The SEC took an…
Jeff and Paulette Carpoff had what sounds like a great idea to me: mobile solar generator units. These are solar generators that would be mounted on trailers that could provide emergency power to cellphone towers and lighting at sporting events. Plus there were generous federal tax credits due to the solar nature of the generators….
Real estate related fraud cases with the Securities and Exchange Commission catch my attention. Two real estate-ish cases popped up in a flurry of cases filed before Labor Day weekend. One was for timber and the other for mobile home parks. Timber operates in a gray area between real estate and extraction. Clearly, the land…
Actions by the Securities and Exchange Commission against real estate companies will catch my attention. A recent complaint against Robert Morgan and his affiliated real estate funds did just that. The SEC complaint is just charges, so we don’t know if the statements are true or what Morgan’s response will be. I’m just using it…
If you are running a Ponzi scheme, don’t send a video to your investors that you are running a Ponzi scheme. According to the Securities and Exchange Commission Complaint, EquityBuild was selling notes secured by real estate by promising safety and high returns. (Hopefully, you realize those things don’t go together.) In reality, EquityBuild was…
I’m a local homer, so fraud cases in Massachusetts catch my attention, especially when they involve private funds. The case of the floundering hedge fund, MC2 Capital, founded by Yasuna Murakami, is the usual example of greed and failure to acknowledge one’s mistakes. Mr. Murakami had big dreams and in the glory days of 2007 thought…
I generally think of fraudsters in two buckets. Some are trying to take the money and run. Some are using the ill-gotten money to cover up a prior loss, hoping to earn it all back. I think most ponzi schemes fall into the later category. A splashy fraud case this week highlighted this second type….
You may have missed Madoff on ABC this week. It’s four hours on the life of the fraudster, portrayed by Richard Dreyfuss. If you have a few hours this weekend, it’s worth watching. Mr. Dreyfuss does a great job portraying Madoff, capturing him lying, cheating and stealing, but looking upstanding in the eyes of his…
One of the challenges faced by the Securities and Exchange Commission when encountering a real estate scam is finding jurisdiction. The SEC is limited to securities and a real estate investment is not a security. But a real estate investments may involve securities or be a securities-like investment. That is the case the SEC is…
In browsing through enforcement actions I look for lessons learned. In some cases it’s compliance doing its job and stopping a fraud before it gets too big. The case against Owen Li caught my eye. His trades were not working so he made a last ditch effort to make it all back. Given that this…