SEC Charges Real Estate Developer with Fraud

Posted on October 13th, 2022 at 12:57 PM
SEC Charges Real Estate Developer with Fraud

From the Desk of Jim Eccleston at Eccleston Law.

The Securities and Exchange Commission (SEC) has charged a Texas-based real estate developer and two other individuals for operating a fraudulent real estate investment offering that generated at least $26 million from nearly 100 investors.

Developer Timothy Barton partnered with home builder Stephen T. Wall and Michael Fu to convince investors, primarily Chinese nationals, to purchase securities offered by a separate entity, which was controlled by the defendants, according to the SEC. The SEC alleged that Barton and Fu provided investors with offering documents indicating that their investments would be solely utilized to purchase real estate parcels for residential development. Barton and Fu additionally promised investors that their principal would be repaid with interest in two years, according to the SEC.

However, Barton and Fu misrepresented the price paid for the residential developments as three times higher than what the defendants had previously agreed to pay for the properties, according to the SEC. Further, the SEC alleged that the defendants misappropriated nearly all investor funds to make Ponzi-style payments to earlier investors, purchase real estate on behalf of Barton’s other entities, pay sales commissions to Fu, and fund Barton’s personal lifestyle. Development never began on the residential properties and the investors have not yet been repaid, according to the SEC. The SEC is seeking permanent injunctions, disgorgement, and civil penalties against each defendant.

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

Tags: eccleston, eccleston law, advisors, law, sec

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