SEC Reportedly Charges MG Capital with Investment Fraud

SEC Reportedly Charges Real Estate Fund Manager With $7 Million Fraud Scheme

The Securities and Exchange Commission reportedly charged a fund manager and his company MG Capital Management L.P. with defrauding retail investors in two real estate funds managed by MG Capital, according to a press announcement today.

Beginning in 2014, the fund manager – a licensed real estate broker with no investment management experience – and MG Capital purportedly solicited investments in two real estate funds, MG Capital Management Residential Funds III and IV, raising a total of $58 million primarily on the strength of an alleged fabricated investment track record, according to the SEC’s complaint.

 The SEC alleges that in marketing Funds III and IV, the individual and MG Capital falsely claimed that they had previously managed “two highly-successful real estate funds with a combined portfolio value of $1.18 billion that had significantly outperformed the S&P 500 Index over a 10-year period” but those prior funds never existed. 

 MG Capital and the fund manager allegedly made numerous other misrepresentations in their marketing materials and offering documents, including claiming that investors’ capital was “100 percent protected from loss” and secured by a non-existent $250 million balance sheet and that they had partnerships with hundreds of prospective tenants with pre-signed, multi-year lease agreements.

 The SEC also alleged that MG Capital and the fund manager misappropriated more than $7 million in investor assets while using fake financial reports to hide “huge losses that ultimately forced the two funds into wind-down”. 

 The foregoing information, which is all publicly available, is being provided by The White Law Group.

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