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Over $63 Million to Be Returned to Investors in Alleged Real Estate Investment Fraud

01/23/2020 | 10:40am EDT

Washington, D.C.--(Newsfile Corp. - January 23, 2020) - The Securities and Exchange Commission today announced that it has obtained a court order authorizing the distribution of over $63 million to investors in connection with a previously filed action.  This amount represents the full return of funds to those who invested. 

The SEC’s complaint, filed in May 2019, alleged that Robert C. Morgan, a New York residential and commercial real estate developer, and two of his entities, Morgan Mezzanine Fund Manager LLC and Morgan Acquisitions LLC, engaged in a fraudulent real estate investment scheme.  As alleged, Morgan financed his real estate development projects through, among other ways, the sales of securities to more than 200 retail investors, many of whom invested through their retirement accounts.  Morgan represented to investors that their money would be used to improve multifamily properties.  Instead, as alleged in the complaint, Morgan and his entities diverted investor funds to facilitate payments to earlier investors and made misrepresentations to later investors about prior fund performance.  Upon filing this action, the SEC sought and obtained certain emergency relief, including the appointment of a receiver responsible for maximizing the monetary recovery for investors.  Since filing, Morgan voluntarily liquidated certain assets to generate funds for collection by the receiver.  On Jan. 21, 2020, the court approved the receiver’s plan to distribute over $63 million to harmed investors.

“Getting money back to defrauded investors is one of our top priorities at the SEC,” said Daniel Michael, Chief of the SEC’s Complex Financial Instruments Unit.  “Although this case is ongoing, the return of funds to investors is an extremely important development and the product of considerable effort by the parties and the receiver.” 

The SEC’s continuing investigation is being conducted by Joshua Brodsky and Daniel Nigro of the Complex Financial Instruments Unit and Lee A. Greenwood and Kerri L. Palen of the New York Regional Office.  The investigation is being supervised by Osman Nawaz.  The litigation is being handled by Mr. Greenwood, Neal Jacobson, and Alexander Vasilescu with assistance from Alistaire Bambach.


© Newsfilecorp 2020
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