SEC Charges North Carolinian with Defrauding Older Investors
The Securities and Exchange Commission charged Greensboro, North Carolina resident Marshall E. Melton and a business Melton controls, Integrated Consulting & Management LLC, with conducting an offering fraud that largely targeted older investors.
The SEC says Melton is a repeat securities law violator who was charged by the commission in 1997 with securities fraud and misappropriation of investor assets.
The SEC’s complaint alleges that, between March 2016 and at least April 2021, Melton fraudulently offered and sold to seven investors a total of approximately $1.03 to $1.49 million of interests in what Melton described as a real estate development venture in Laurinburg, North Carolina.
The complaint states that six of these investors ranged in age from almost 60 to just over 86, with an average age of 75 at the time of investment. According to the complaint, Melton told each investor that he would use the funds to purchase properties in disrepair in downtown Laurinburg, renovate those properties for rental income and resale, and pay the investors a return from rental income and/or sale proceeds.
The SEC alleges that, while Melton used some investor funds to purchase seven properties in Laurinburg, he did little to renovate, develop, or commercially use them, and instead misappropriated for his own use nearly two-thirds of the investors’ funds.
The complaint further alleges that, in April 2021, Melton transferred ownership of five of the Laurinburg properties to two complaining investors in exchange for a release of claims against him, but to facilitate this transfer, he fraudulently induced two other investors to relinquish their interests in those properties – misleadingly telling one that he would get her something better, which he never did, and misrepresenting to the other that he had a buyer for the property and could only make the sale if the investor exchanged his interests for a promissory note that Melton would then repay. The complaint states that Melton later defaulted on this promissory note.
Melton worked with 10 firms since 1982, including Financial Network Investment and New England Securities Corporation.
The complaint charges Melton and Integrated Consulting & Management LLC, with violating SEC rules. The SEC seeks permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties against each defendant. The SEC also seeks a conduct-based injunction against Melton, permanently enjoining him from participating in the issuance, purchase, offer, or sale of any security except for his own personal accounts.
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