SEC Charges Four In $197M Lending Scheme

Posted by Orb Staff on July 30, 2009 No Comments
Categories : Residential Mortgage

ink=http://www.sec.gov/litigation/litreleases/2009/lr21157.htm][u]Securities and Exchange Commission[/u][/link] (SEC) has charged four individuals and a Phoenix-based company with securities fraud for orchestrating a mortgage lending scheme. According to the SEC, the defendants attracted ‘hundreds of investors’ by making false and misleading statements about the safety and performance of investments. The commission alleges that the four people raised more than $197 million from investors through their company, Radical Bunny LLC. The company's four managing members – Tom Hirsch of Paradise Valley, Ariz.; Harish Shah of Phoenix; and Howard Walder and Berta Walder of Phoenix – pooled investor funds to make loans to Mortgages Ltd., a Phoenix-based originator of high-interest, short-term loans to real estate developers, the SEC says. According to the commission's complaint, the four promoters misrepresented how Mortgages Ltd. could use money loaned by Radical Bunny by falsely telling investors that their funds could only be used for commercial development when there were no such restrictions. They also misrepresented to investors that they were closely monitoring the financial condition of Mortgages Ltd., which has filed for bankruptcy. The individuals charged also allegedly misrepresented to investors that their offering was not subject to federal securities laws, even though legal counsel had advised them otherwise on at least three separate occasions. Radical Bunny was not registered with the SEC in any capacity and did not register any offering under the securities laws. Therefore, in addition to the securities fraud charges, Hirsch, Shah and the Walders were charged by the commission with offering and selling unregistered securities and for acting as unregistered broker-dealers in violation of the federal securities laws SOURCE: [link=http://www.sec.gov]SEC

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