According to SEC charges filed yesterday, investment firm JSW financial defrauded real estate investors out of $17 million by allegedly placing the money in “secured real estate loans” and actually using it to fund failing real estate projects[1]. The firm sent false account statements showing interest earnings higher than 10 percent while “squandering nearly all of the investors’ money trying to keep their own failing operations afloat,” said Marc Fagel, SEC regional office director in San Francisco. JSW is currently in bankruptcy and has been out of business since 2008. The firms managed to evade detection for nearly six years because the “secured loans” were being made to real estate investment funds that were controlled by JSW[2]. Two of the defendants also used $900,000 of the investor money to purchase homes for themselves.
Thank you for reading the Bryan Ellis Real Estate Letter!
Your comments and questions are welcomed below.
[1] http://www.mercurynews.com/breaking-news/ci_17677961?nclick_check=1
[2] http://www.bizjournals.com/sanjose/news/2011/03/22/sec-charges-mt-view-firm-with-fraud.html
