Massachusetts Regulators Halt Million Dollar Real Estate Investment Scheme
The Massachusetts Securities Division has charged an Illinois man for selling unregistered securities in real estate ventures to Massachusetts investors, totaling nearly $1 million.
The Massachusetts Securities Division has charged an Illinois man for selling unregistered securities to Massachusetts investors totaling nearly $1 million for various real estate ventures. The regulators claim that Glenn Mueller orchestrated a real estate investment scheme involving the sales of unregistered promissory notes on behalf of various companies that he owned.
The administrative complaint claims that for more than 40 years Mueller and Northridge Holdings Ltd built up a “monumental and byzantine” investment empire consisting of at least 32 interwoven real estate development corporations and limited partnerships. Mueller owns 100 percent of the stocks in Northridge, a property management company operating out of Illinois.
“To date, Northridge has taken in at least $47 million of investor funds through unregistered promissory notes nationwide and additional funds through unregistered limited partnerships,” the complaint states. Similar complaints were also brought in New Hampshire, Illinois, and New Jersey.
“This case is a good example of the importance of checking that any investments you are considering are being sold by registered dealers or agents,” said Secretary of the Commonwealth William Galvin. “I encourage all Massachusetts investors to contact my office before making a purchase, to be sure that they are dealing with a legitimate investment opportunity.”
The promissory notes, referred to by these companies as “CD alternatives,” were not registered as an issuance of securities, nor were they insured by the Federal Deposit Insurance Corporation. Products sold as part of the scheme were marketed to at least six Massachusetts investors by “finders” paid commissions by Mueller’s company. Massachusetts residents have invested a combined total of $926,000 in the scheme.
By employing a team of finders to seek out investors in exchange for commissions, the complaint states that Mueller and Northridge acted as de facto broker-dealers, despite the fact that neither has ever been registered in any state or with the Securities and Exchange Commission.
The state regulators are seeking an administrative fine, disgorgement of all profits, and restitution payments to investors for all losses. They are also seeking an order requiring Mueller and Northridge to cease and desist and a bar from registering in Massachusetts.
