If you are have invested with Equitybuild or Equitybuild Finance, you may be able to pursue recovery of any losses that you may suffer through securities litigation. Please call the Connecticut office of Kons Law Firm at (860) 920-5181 for a FREE, NO OBLIGATION consultation to discuss your legal rights and options.
How Can I Pursue Recovery of My Equitybuild Investment Losses?
According to a recent lawsuit filed by the Securities and Exchange Commission (SEC), on August 15, 2018, the SEC filed a lawsuit against Equitybuild, Equitybuild Finance, Jerome (Jerry) Cohen, and Shaun Cohen (collectively, "Equitybuild"), to stop a Ponzi scheme they were allegedly operating. According to this lawsuit, since at least 2010, Jerry Cohen and Shaun Cohen, through their companies, Equitybuild, Inc. and Equitybuild Finance, LLC, raised at least $135 million from more than 900 investors nationwide. Equitybuild raised these funds by allegedly making false promises to investors of safe investments, secured by income producing real estate, that generated returns of 12% to 20%. Most of the real estate promoted to investors were residential properties in underdeveloped areas on the South Side of Chicago.
Unfortunately for investors, the SEC has alleged that Equitybuild defrauded their investors in multiple ways. First, the SEC alleged that they skimmed 15% to 30% off each investment by taking undisclosed fees. They allegedly did this by telling investors that the properties being purchased cost substantially more than what Equitybuild actually paid for them. This meant that investors were not only overcharged, but the real estate supposedly securing their investments would be worth much less than what they told investors.
Beyond the exaggerated property valuations and undisclosed fees, the SEC alleged that Equitybuild falsely told investors that their impressive returns would be generated by profitable real estate. Contrary to these representations, the SEC alleged that they actually had sustained heavy losses and the properties they pitched to investors failed to earn anywhere near enough to pay the promised double-digit returns. As a result, the SEC alleged that Equitybuild's investment program devolved into a Ponzi scheme, as they could only pay earlier investors by raising funds from unwitting new investors. Rather than disclosing their financial problems, to keep the scheme afloat Equitybuild allegedly continued to solicit investors with offers of safe investments and outsized returns.
As time went on Equitybuild changed their business model by offering investments in pooled investment funds, again promising double-digit returns generated by income-producing real estate. However, Equitybuild allegedly concealed from new investors that most of the properties supposedly being acquired and renovated by new investor proceeds were the very same properties “securing” the investments of earlier investors. In addition, the SEC alleged that Equitybuild hid from the new investors that, rather than be deployed to develop real estate, significant amounts of their money would be used to make Ponzi payments to earlier investors. As for the earlier investors, Equitybuild allegedly forced them to restructure their investments by pushing back the timeframes for repayment, swapping investors’ supposedly secured investments
for new unsecured instruments, and by transferring title of the properties purportedly securing the investments into special purpose entities owned by Jerry Cohen.
How Do I Recovery Equitybuild Ponzi Losses?
Investors in Equitybuild can evaluate third-party claims against those that sold Equitybuild (stockbrokers, financial advisors, or insurance agents), or those professional services firms (law firms, accounting firms, etc.) that may have materially participated in Equitybuild's unregistered securities offering. In the United States, under state and federal law, all securities must be registered with the SEC and applicable state securities regulators, or exempt from registration. As the SEC ha alleged that the Equitybuild investments were securities that were not registered or exempt from registration, investors may be able to pursue claims against various third-parties that materially participated in these transactions. This would provide investors an additional avenue of recovery above and beyond what they might get back if there is a distribution from a court-appointed receiver.
Call Now To Discuss How to Pursue Equitybuild Ponzi Scheme Losses
If you have lost money investing in Equitybuild or Equitybuild Finance, please call Kons Law Firm at (860) 920-5181 for a FREE, NO OBLIGATION consultation to discuss investment loss recovery options. Kons Law Firm represents investors nationwide in securities arbitration and litigation matters. To learn more about the Firm’s securities litigation and FINRA arbitration practice, please visit www.investmentfraudattorneys.com.