The tale of Western Financial Planning Corporation and Louis Schooler first caught my eye because the Securities and Exchange Commission brought charges against a real estate company. I stuck with the story because Western Financial tried really hard to structure the investments to avoid being considered securities. Even thought it tried really hard, a court … Read more »
Category: What is a Security?
Miscounting Residents as Securities Fraud
A recent SEC enforcement action caught my attention because it involved defrauding a landlord and miscounting residents. That left me scratching my head over why the Securities and Exchange Commission was involved with a senior living residence. The SEC Enforcement Division alleges that then-CEO Laurie Bebo and then-CFO John Buono made false disclosures and manipulated … Read more »
Can an ATM Machine Be a Security?
Nationwide Automated Systems offers turnkey ATM solutions. A turnkey ATM program addresses the need for ATM service, repair, system monitoring, and cash replenishment. Typically the ATM provide will split some of the fee income with the property owner where the ATM is located rather than pay a fixed rent. To raise capital Nationwide create a … Read more »
Combining Immigration Fraud and Investment Fraud
The EB-5 Immigrant Investor Program sounds like a scam so I’m not surprised to see it pop up in actual scams. The EB-5 program provides foreign investors who can demonstrate that their investments are creating jobs in this country with an expedited path to lawful permanent residency in the United States. EB-5 is not common … Read more »
Not Securities Fraud By Reason of Insanity
Some investment fraud schemes sound crazy, but leave just a enough truthful-sounding bits to catch people. But Thomas Lawler’s scheme sounds completely bonkers. He established the Freedom Foundation to offer investors the chance to erase their debts and collect lucrative profits through the purchase of “administrative remedies”. Never heard of profit-making “administrative remedies”? Lawler can … Read more »
Massachusetts Stops Real Estate Scam
Secretary of State William Galvin claims Cabot Investment Properties LLC and its principals, Carlton P. Cabot and Timothy J. Kroll, stole more than $5 million from Massachusetts residents. Cabot was offering tenant-in-common interests to investors. But I remember from law school that a tenant-in-common interest is real estate. So why are the defendants charged with … Read more »
Update on the Cay Clubs
The Securities and Exchange Commission brought charges against several executives of Cay Clubs Resorts and Marinas for defrauding investors. The case originally caught my eye because it involved real estate and would likely play a role in my continuing quest to figure out what’s a security. The SEC’s complaint stated that the defendants “offered investors … Read more »
Can a Vending Machine Be a Security?
The Securities and Exchange Commission brought charges against Joseph Signore and Paul Lewis Schumack, II in connection with an alleged investment fraud concerning the sales and marketing of a “Virtual Concierge” machine. The machine looks like an ATM, but carries advertising and can print tickets and coupons. It looks shady, but a machine alone is … Read more »
Are Oil and Gas Investments “Securities”?
The Securities and Exchange Commission brought an enforcement action against Jeffory D. Shields, GeoDynamics, Inc., and several other business entities affiliated with Mr. Shields, alleging securities fraud. The businesses are oil and gas exploration and drilling ventures and Mr. Shields, as managing partner of GeoDynamics, marketed the interests Joint Venture Agreements. The district court granted … Read more »
When a Real Estate Investment Empire Turns Into a Ponzi Scheme
Real estate investment is capital intensive. Most opportunistic and value-add real estate investments are not cash flow positive for the entire ownership of the asset. As some point, an investment may be using equity to pay outstanding interest on debt. The line between a ponzi scheme and long term investment can hinge on the nature … Read more »