SEC Charges Father and Son Duo with Operating $135 Million Fraud Scheme
The Securities and Exchange Commission has charged Jerome Cohen and Shaun Cohen with operating a $135 million offering fraud involving real estate located primarily on Chicago’s south side.
The Securities and Exchange Commission has charged Jerome Cohen and Shaun Cohen and their companies, Equitybuild Inc. and Equitybuild Finance LLC with operating a $135 million offering fraud involving real estate located primarily on Chicago’s south side.
The SEC’s complaint alleges that since 2010, the defendants have sold promissory notes to at least 900 investors throughout the country. The defendants allegedly raised these funds by falsely promising safe investments fully secured by income-producing real estate.
According to the SEC’s complaint, the defendants took 15-30 percent of investors’ funds as undisclosed fees, hiding the fees by reporting inflated acquisition costs and that, contrary to defendants’ representations, the real estate did not earn enough to pay the double-digit returns promised to investors. As a result, the defendants could only pay earlier investors by raising funds from new investors.
“Defendants also 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,” said the SEC.
According to the SEC’s complaint, the defendants have violated certain anti-fraud and registration provisions of federal securities laws. The SEC’s complaint seeks injunctions against future securities laws violations, disgorgement of the defendants’ ill-gotten gains, and civil penalties.
The SEC recently obtained a temporary restraining order which enjoins the defendants from raising any additional funds from investors.
Jerome Cohen founded Equitybuild and Equitybuild Finance and is the CEO and president of Equitybuild. His son, Shaun Cohen, is the president and sole officer of Equitybuild Finance and the vice president of Equitybuild.
