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SEC to return $63M to defrauded investors
The SEC has announced that it has obtained a court order authorizing the distribution of over $63 million to investors in connection with a previously filed action. This amount represents the full return of funds to those who invested. A complaint filed by the SEC in May 2019 alleged that Robert C. Morgan, a New York residential and commercial real estate developer, and two of his entities, Morgan Mezzanine Fund Manager LLC and Morgan Acquisitions LLC, engaged in a fraudulent real estate investment scheme. As alleged, Morgan financed his real estate development projects through, among other ways, the sales of securities to more than 200 retail investors, many of whom invested through their retirement accounts. Morgan represented to investors that their money would be used to improve multifamily properties. Instead, as alleged in the complaint, Morgan and his entities diverted investor funds to facilitate payments to earlier investors and made misrepresentations to later investors about prior fund performance.
Upon filing this action, the SEC sought and obtained certain emergency relief, including the appointment of a receiver responsible for maximizing the monetary recovery for investors. Since filing, Morgan voluntarily liquidated certain assets to generate funds for collection by the receiver. On January 21, 2020, the court approved the receiver’s plan to distribute over $63 million to harmed investors.