The Defendants characterized BBC Equities to prospective investors as a real
estate investment fund, and as a safe investment vehicle with annual returns of 8% to 12%. However, BBC Equities was far from a safe investment. Unbeknownst to the investors, their proceeds were used to finance Defendants’ expensive lifestyles, paying for luxury homes, watercraft, jewelry, gambling, exotic vacations, and expensive cars.
The Fraud Defendants have lied to prospective investors about the use of investor
funds; the risks associated with the investment; the purported compensation, commission, and finder’s fees paid to Defendants and other; and the true financial condition of BBC Equities.
To keep their scheme afloat, the Fraud Defendants spent an additional $11.3
million of investor funds perpetrating a Ponzi scheme. They used new investment proceeds to make quarterly payments to earlier investors, among other payments. They have also spent $14 million of investment proceeds soliciting and raising money from new investors to fuel the scheme.
Defendants’ lavish spending and the cost of propping up their Ponzi scheme left
BBC Equities with little to invest. Of the more than $50 million in investment proceeds, no more than $21 million remained for BBC Equities to use acquiring real estate properties. Worse, those properties are highly leveraged, with mortgages and other liabilities exceeding $128 million.
Defendants’ malfeasance has rendered BBC Equities financially insolvent. Its
monthly expenses exceed its revenues by a ratio of more than 10-to-1. To avoid the collapse of their scheme, Defendants apparently continued to actively solicit new investors and fresh investment proceeds up until the time of the SEC lawsuit. Now, many of the Defendants have seen their assets frozen, and the investors are unable to access the money they invested.
On June 26, 2014, the court issued an Order dismissing this action pursuant to an out of court settlement reached by the parties.