There will always be bad people, especially the heartless few who show no remorse for preying on the elderly. While this is an older case, the summary details the lengths some people will go to steal only to benefit themselves.
A Ponzi scheme involving numerous real estate investors came to light following the filing of a fraud complaint in 2014 against Cabot Investment Properties by the Commonwealth of Massachusetts. According to the complaint, Carlton P. Cabot and Timothy J. Kroll, who own Cabot Investment Properties, skimmed more than $9 million into their accounts to support a “lavish lifestyle” in Manhattan.
Attorney Brian Mahany, who had represented more than 200 victims in this case, describes in his article “Hundreds of Small Real Estate Investors Scammed in $250 Million Ponzi Scheme” that many of the investments were earmarked for the down payment on several projects. To make matters worse, investors were duped into giving personal guarantees on the loans putting all their wealth, including their homes, at risk when default and foreclosures occurred. Mahany said investors were told the loans were non-recourse and did not know they were signing up for personal liability on investments of $50 million to $100 million.
The scheme involved hundreds of small real estate investors, many of them elderly, from across the country who pooled their money with Cabot in 18 different investments called tenants-in-common exchanges which involved apartment buildings, shopping centers, and other commercial investments across the country.
The complaint in this 2014 case alleged Cabot and Kroll “committed fraud in connection with the offer and sale of securities due to misappropriation of over $9 million from investment proceeds through wire transfers, material misrepresentations and omissions to investors, and misleading disclosures regarding investors’ financial exposure.”
Jerry of Ipsen Due Diligence has worked on real estate syndication matters where misappropriation and commingling were an issue and is available to work with your attorney should you suspect similar activity.
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