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 »
Category: What is a Security?
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 »
Failing to Turn Real Estate Into a Security
Fee simple ownership of the “bricks and mortar” of real estate is not a security. “The offer of real estate as such, without any collateral arrangements with the seller or others, does not involve the offer of a security.” As you move further away from that model, you move closer and closer to the ownership … Read more »
Is Bitcoin a Security?
You may have noticed that I focus on SEC actions against real estate companies. At the core of that interest is a look at whether the Securities and Exchange Commission has jurisdiction. The SEC is limited to securities. Commodities get covered by the CFTC and real estate gets covered by ….. Bruce Carton pointed to … Read more »
Update: SEC Charges Real Estate Executives with Investment Fraud But Fails to State a Claim
The Securities and Exchange Commission brought charges against Cay Clubs Resorts and Marinas and several of its executives 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 first ruling came out and it … Read more »
Update: Real Estate Investment Fraud or Securities Fraud?
Back in September, the SEC announced an asset freeze against Western Financial Planning Corporation and its principal Louis Schooler for a $50 million real estate fraud. That caught my eye because the SEC has little jurisdiction over real estate. The structure of the real estate investments went a long way to try to be not … Read more »
Doesn’t Matter if Real Estate is a Security if You Lie to the Feds
I continue to look at the margins where real estate and securities meet, so any case brought by the SEC against an real estate firm catches my eye. The latest to catch my attention was an investigation into Robert J. Vitale and his investment company, Realty Acquisitions & Trust. While there might be some argument … Read more »
Revisiting the SEC’s Stance on When Real Estate is a Security
After last week’s charges against Cay Clubs, I remembered that I wanted look at an old SEC Release on the applicability of the federal securities laws to condominiums and real estate development. Back in 1973 The Securities and Exchange Commission issued a release describing situations where a real estate offering could become a securities offering. … Read more »
SEC Charges Real Estate Executives with Investment Fraud
The Securities and Exchange Commission brought charges against Cay Clubs Resorts and Marinas and several of its executives for defrauding investors. The case 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 defendants have not settled with SEC, so … Read more »
Is a General Partnership Interest a Security?
When the SEC announced an asset freeze against Western Financial Planning Corporation and its principal Louis Schooler, I was a bit troubled by the structure of the investments in question. The firm had structured the real estate investment vehicles as general partnerships. The presumption is that a general partnership interest is not a security. So … Read more »