Compliance
Phony Real Estate Investment Manager Slapped With $500,000 In Fines
An investigation carried out by a prominent US financial regualtor found that James Toner Jr stole $51,000 from investors as part of a real estate investment scam.
A purported real estate investment manager has agreed to pay more
than $500,000 to settle charges imposed by a US regulator that he
siphoned $51,000 from investors who were misled about how their
money would be managed.
The Securities
and Exchange Commission alleged that James Toner Jr of
Scottsdale, Arizona, stole $51,000 from investors who were
falsely told that he would personally manage some of the real
estate projects in which they purchased interests. The stated
purpose of each investor was to buy a residential property in the
Phoenix area, renovate it, and then sell it to generate
profit.
Toner took $31,000 in undisclosed management fees even though he
did not manage any of the offerings, and stole $20,000 directly
from an investor, the SEC said. He also failed to conduct any due
diligence and allegedly entrusted a real estate broker to manage
the funds, who then squandered investors' money, the financial
watchdog said.
According to the SEC's complaint, the real estate broker was
later jailed for other crimes.
Toner also told investors he would make personal investments in
the projects when, in fact, he never did, the SEC said. In order
to skirt registration requirements for the offerings, the SEC
alleged that Toner instructed some investors to falsely state
that they were accredited investors.
Toner neither admitted nor denied the charges, but agreed to a
court order that required him to pay disgorgement of $51,358 plus
interest of $4,893, and a penalty of $450,000. The settlement is
subject to court approval.
''As alleged in our complaint, Toner defrauded investors with
false promises that he would manage their investments and
personally invest along with them,” said Andrew Calamari,
director of the SEC's New York regional office.
He added: “Instead he siphoned off some investor money as
management fees and handed over the rest to a third party without
any due diligence.”