Investment Fraud: Man Who Pretended to be Financial Adviser Pleads Guilty to $13M Scam, Ponzi Fraudster is Accused of Bilking Friends & Coworkers, and Real Estate Scammers Must Pay Back Investors $30M
Man Accused of Targeting Religious Congregation Members Admits to $13M Fraud
Sung “Laurence” Hong has pleaded guilty to money laundering and wire fraud, as well as to pretending to be an investment adviser so he could bilk clients of almost $13M. His plea agreement states that Hong mostly targeted members of religious organizations.
This is not the first time Hong that was caught for investor fraud. He served three years in prison after defrauding a neighbor of about $800K. Now, he may end up back in jail for decades.
SEC Files Case Against Man Accused in $250K Ponzi Scam
The US Securities and Exchange Commission has filed charges against Niket Shah, who is accused of stealing over $250K from coworkers and friends in a Ponzi scam. The regulator’s case comes in the wake of complaints brought by investors.
The SEC contends that Shah used Spark Trading Group LLC to defraud over a dozen investors who placed money in two funds that he promoted. Shah allegedly lied about having a successful trading record, the company’s returns, and the way that investors’ funds would be used. He also is accused of modifying financial statements so that it would look like the funds were making, rather than losing, money. Meantime, investors were promised returns each month and were told that there would be no losses.
Instead, Shah used the funds that investors gave him for his own use. What he did invest sustained significant losses. When investors asked for the return of their money Shah allegedly lied and said that government agencies had frozen the funds.
Now, the regulator wants ill-gotten gains, interest, and for Shah to pay penalties.
Real Estate Fraudsters Ordered to Pay $30M back to Investors
McKinley Mortgage Co. LLC, Tobias Preston, his brother Charles Preston, and son Caleb Preston have settled SEC charges accusing them of a real estate scam that sought to defraud hundreds of investors of millions of dollars. As part of the settlement, they must back the nearly $30M they are accused of improperly receiving from investors of the Alaska Financial Company III LLC fund (AFC III Fund). They are not, however, denying or admitting to the SEC allegations.
McKinley and the Prestons raised over $66M from about 300 investors, many of them unaccredited and inexperienced investors. A lot of them were retail investors. They allegedly did this by making false statements, including that investments in the AFC III fund were secure and had seen high returns. In truth, contends the regulator, the fund was not solvent, nor had it been able to satisfy its interest obligations for some time.
The SEC’s lawsuit notes that AFC III issued promissory notes that were touted as safe and with 6-8.25% yearly returns that were “predictable.” The principal was supposed to be preserved, since the investments were supposed to be mostly secured by property deeds of trust. Also, false documents claimed that the fund’s assets were making between 12% and 14% when, actually, there were few returns, if any, being made.
While part of investors’ money was invested as stated, Tobias Preston is accused of misusing over $17M to pay for his own business and expenses. Meantime, McKinley allegedly misused another $14M to cover operating costs.
The Prestons and Laura Sanford, an accounting manager, allegedly worked together to conceal the fraud, including giving investors false information and hiding certain information from auditors.
Aside from repaying the money misappropriated from investors, Tobias Preston will pay a $425K penalty and give back any assets he didn’t acquire properly. Caleb Preston will pay a $150K penalty while Charle’s penalty is $425K, too.
Our investment fraud lawyers are here to help investors throughout the US in trying to recover their losses. Contact Shepherd Smith Edwards and Kantas, LTD LLP today.
Washington man pleads guilty in $13M investment fraud, Associated Press/KHQ, March 27, 2018
The SEC Complaint in the Real Estate Scam (PDF)
The SEC Complaint in the Shah Case (PDF)
More Blog Posts from SSEK Law Firm:
Wedbush Securities Faces Failure to Supervise Charges Over Broker’s Pump-And-Dump Scam, Stockbroker Fraud Blog, March 28, 2018
FINRA Panel Orders UBS to Pay $204K in Puerto Rico Bond Fraud Claim, Stockbroker Fraud Blog, March 22, 2018
Fund Manager Accused of Losing $178M in Residential Mortgage-Backed Securities is Barred from the Industry, Institutional Investor Securities Blog, February 16, 2018