The Securities and Exchange Commission on Monday announced fraud charges and an emergency asset freeze against a South Carolina businessman for series of fraudulent bond offerings to purchase and renovate assisted living and memory care facilities in Georgia and Alabama.
Dwayne Edwards is accused of siphoning funds he raised from investors for the purpose of purchasing or renovating senior housing facilities.
The SEC alleges in its order that Edwards improperly commingled money from several different municipal bond offerings and the revenues of the facilities underlying the offerings – with Edwards improperly commingling at least $3.9 million of the nearly $62 million raised through nine separate conduit municipal bond offerings.
The offerings were each supposed to finance a particular assisted living or memory care facility in Georgia or Alabama, the SEC states. “From the commingled funds, Edwards allegedly diverted investor money for personal use as well as to finance other unrelated bond offerings.”
Andrew Calamari, director of the SEC’s New York Regional Office, said that “as alleged in our complaint, investors thought they were investing in a single senior housing project while their money was actually being used to fund an ever-expanding web of affiliated facilities and the personal expenses of Edwards and his friends and family.”
The SEC’s complaint, filed Jan. 20 in federal district court in Newark, N.J., also charges Edwards’ former business partner Todd Barker, who agreed to a bifurcated settlement with monetary sanctions to be determined at a later date.
The court issued an order at the SEC’s request freezing the assets of Edwards and certain relief defendants. The court also appointed a temporary receiver over the facilities.
— Check out SEC Fines BlackRock and HomeStreet for Impeding Whistleblowers: Enforcement on ThinkAdvisor.