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.”
