The U.S. Securities & Exchange Commission (SEC) charged four people and a Phoenix-based company of running a mortgage fraud this week.
The foursome allegedly raised more than $197 million from investors nationwide, and then used their company Radical Bunny LLC to pool investor funds to make loans to Mortgages Ltd., a Phoenix-based commercial real-estate lender that filed for bankruptcy in June 2008.
According to the SEC’s charges, the four people—Tom Hirsch, Harish Shah, and Howard and Berta Walder—misled investors by promising them safety and performance on investments, when in reality they acted differently.
“They repeatedly overstated the safety of the investment and their knowledge of the underlying business to which they lent investor funds [Mortgages Ltd]. Unbeknownst to investors, more and more of their money was being shifted into fewer and riskier loans,” said Rosalind Tyson, director of the SEC’s Los Angeles Regional Office in a statement.
In addition, they inaccurately represented to investors that they were regularly watching Mortgages Ltd.’s financial condition. In reality it was a scam.
Radical Bunny’s main business was lending money to Mortgages Ltd. Radical Bunny lent about $197 million to Mortgages Ltd. during its history. Mortgages Ltd. used the money with other funds it raised from other investors, to make short-term loans to real estate developers.
Mortgages Ltd. was forced into bankruptcy in June 2008. Since January 2009 the SEC and the Arizona Department of Financial Institutions investigated whether Radical Bunny had violated securities laws in connection with the Mortgages Ltd. bankruptcy.
Radical Bunny’s four managing members, Tom Hirsch, Harish Shah, Howard and Berta Walder (husband and wife) lost investors’ trust in the start of the year. A trustee was named to manage the company, after conflicts arose among the four.
According to the SEC complaint, “From at least late 2005 through June 2008, the defendants raised over $197 million from at least 900 investors nationwide through an unregistered offer and sale of securities in the form of promissory notes or investment contracts.”
In addition to the securities fraud charges, the foursome were accused of posing as broker-dealers. Through that deception, they sold unregistered securities. The SEC requires all broker-dealers to register with the federal agency. The charges arose because Radical Bunny was not registered with the SEC in any way. As such, Radical Bunny also was accused of selling unregistered securities.
The SEC claimed that the four communicated with investors through meetings held at a luxury golf resort in Scottsdale, AZ. In those meetings they provided unsuspecting investors with presentations that showed fabricated balances of their investments. The investors were encouraged to invite their friends and families to the meetings.
The office of Radical Bunny LLC was not reachable for comment.
The foursome allegedly raised more than $197 million from investors nationwide, and then used their company Radical Bunny LLC to pool investor funds to make loans to Mortgages Ltd., a Phoenix-based commercial real-estate lender that filed for bankruptcy in June 2008.
According to the SEC’s charges, the four people—Tom Hirsch, Harish Shah, and Howard and Berta Walder—misled investors by promising them safety and performance on investments, when in reality they acted differently.
“They repeatedly overstated the safety of the investment and their knowledge of the underlying business to which they lent investor funds [Mortgages Ltd]. Unbeknownst to investors, more and more of their money was being shifted into fewer and riskier loans,” said Rosalind Tyson, director of the SEC’s Los Angeles Regional Office in a statement.
In addition, they inaccurately represented to investors that they were regularly watching Mortgages Ltd.’s financial condition. In reality it was a scam.
Radical Bunny’s main business was lending money to Mortgages Ltd. Radical Bunny lent about $197 million to Mortgages Ltd. during its history. Mortgages Ltd. used the money with other funds it raised from other investors, to make short-term loans to real estate developers.
Mortgages Ltd. was forced into bankruptcy in June 2008. Since January 2009 the SEC and the Arizona Department of Financial Institutions investigated whether Radical Bunny had violated securities laws in connection with the Mortgages Ltd. bankruptcy.
Radical Bunny’s four managing members, Tom Hirsch, Harish Shah, Howard and Berta Walder (husband and wife) lost investors’ trust in the start of the year. A trustee was named to manage the company, after conflicts arose among the four.
According to the SEC complaint, “From at least late 2005 through June 2008, the defendants raised over $197 million from at least 900 investors nationwide through an unregistered offer and sale of securities in the form of promissory notes or investment contracts.”
In addition to the securities fraud charges, the foursome were accused of posing as broker-dealers. Through that deception, they sold unregistered securities. The SEC requires all broker-dealers to register with the federal agency. The charges arose because Radical Bunny was not registered with the SEC in any way. As such, Radical Bunny also was accused of selling unregistered securities.
The SEC claimed that the four communicated with investors through meetings held at a luxury golf resort in Scottsdale, AZ. In those meetings they provided unsuspecting investors with presentations that showed fabricated balances of their investments. The investors were encouraged to invite their friends and families to the meetings.
The office of Radical Bunny LLC was not reachable for comment.
Friends Read Free