Lawyer Faces Criminal Charges for Creating False Documents in Ponzi-Scheme
A real estate lawyer was barred from practicing before the SEC and faces criminal charges for orchestrating an affinity fraud that included creating false operating agreements to mislead investors and mortgage lenders.
The SEC asserts that the lawyer provided false operating agreements and related support documents to obtain refinance mortgages based on inflated property values. The SEC argues that the defendant needed the funds to support his Ponzi-like scheme that involved overlapping ownership interests in apartment complexes and commingled investor funds. The scheme targeted members of the Orthodox Jewish community.
Lawyers inhabit a special place in SEC enforcement hell. The Enforcement Division generally holds lawyers to a higher standard of care because they have the knowledge to perpetrate frauds and the skills to prevent them. Although legal ignorance is rarely a defense, the SEC will impute intent with lawyers who use their skills to defraud investors.
Read full complaint here.