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February 01, 2019 at 10:00 AM
The Securities and Exchange Commission charged an Atlanta investment advisor and an entity he controls with defrauding a private fund they managed and its investors.
The SEC’s complaint, filed in federal district court in Atlanta, alleges that, beginning in August 2009 and continuing until at least June 2018, Joseph Meyer Jr.,and Statim Holdings Inc. offered and sold four classes of limited partnership interests in Arjun L.P., a private fund.
The complaint alleges that Meyer promised investors that, in return for giving up substantial portions of their profits, investors in one class would be protected from losses, a feature he called “No Loss Protection,” and investors in two other classes would receive guaranteed fixed returns.
The complaint further alleges that Meyer told investors that the relinquished profits would be used to fund the No Loss Protection and guaranteed returns when Arjun had insufficient profits.
“Unbeknownst to investors, Meyer caused Statim to withdraw from the fund substantially all of the relinquished profits as they were generated, using them to pay his living expenses,” according to the complaint.
The complaint alleges that, to deceive investors, Meyer recorded on Arjun’s books a receivable due from Statim. According to the complaint, Meyer claimed to pay down Statim’s receivable, but did so by directly or indirectly borrowing money from the fund, therefore making the guarantees and No Loss Protection illusory because they were backed by nothing other than the receivable that sometimes grew to $2.9 million, or 11.5% of Arjun’s net asset value.
The SEC seeks permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties.
SEC Charges Real Estate Developer for Fraud to Fund Luxury Hunting Ranch
The SEC filed charges against Texas resident and real estate developer Phillip Michael Carter, two other individuals, and several related entities for conducting a multimillion-dollar offering fraud.
The SEC’s complaint alleges that Carter, along with Bobby Eugene Guess and Richard Tilford, raised almost $45 million from more than 270 investors across the United States by selling short-term, high-yield promissory notes issued by a number of shell companies intentionally named to confuse investors.
The complaint alleges that Carter, Guess, and Tilford claimed to offer investments in Carter’s legitimate real estate development companies, which were purportedly backed by hard assets from actual real estate development projects.
Instead, the complaint alleges, the individual defendants sold securities issued by unrelated, but closely named, entities that had no assets.
Carter then misappropriated investor funds to pay $1.2 million towards a personal IRS tax lien, operate a luxury hunting ranch, fund his lifestyle, and make over $3 million in Ponzi payments to investors.
