SEC Focused on Real Estate-Based Ponzi Schemes

By February 5, 2021 Ponzi Scheme

In late 2020, the Securities and Exchange Commission (the “SEC”) initiated multiple enforcement actions targeting real estate-based Ponzi schemes. On September 29, 2020, the SEC charged Lewis I. Wallach, the former president of the California-based Professional Financial Investors, Inc. (“PFI”), with orchestrating a $350 million scheme to defraud more than 1,300 investors, many of whom were elderly or retired. Wallach misappropriated more than $26 million of investor funds, falsely claiming that investor proceeds would be used primarily to invest in residential and commercial real estate managed by PFI. Wallach instead diverted these funds for personal use, including the purchase of a vacation home and payment of personal expenses.

On December 21, 2020, the SEC filed an emergency action against Silicon Sage Buildings LLC (“Silicon Sage”), a California-based real estate development company, and its sole owner Sanjeev Acharya, for misappropriating $119 million from approximately 250 retail investors, many of whom were members of the Northern California South Asian community. Acharya promised exorbitant returns to investors, misrepresenting the profitability of Silicon Sage’s real estate business. In reality, the majority of Silicon Sage’s real estate projects did not generate enough money to pay the promised returns to investors.

Perpetrators of fraudulent schemes often target the elderly or members of their own community, as did Wallach and Acharya in the cases brought by the SEC. If you believe that you may have suffered financial losses as part of a fraudulent scheme, we may be able to help.

Fishman Haygood has extensive experience representing victims of investor fraud. The firm currently represents the victims of the Stanford Ponzi scheme, a $7 billion scheme run by R. Allen Stanford that collapsed in 2009, and has handled multiple cases involving Ponzi schemes in both FINRA arbitration and in federal court, including the Blank V. Glover FINRA Arbitration. You can find out more about Fishman Haygood’s work representing victims of Ponzi schemes here.