Management Solutions, Inc., Wendell A. Jacobson and Allen R. Jacobson

On December 15, 2011, the SEC obtained a temporary restraining order and an emergency asset freeze in an alleged $220 million real estate-based offering fraud and Ponzi scheme orchestrated by Wendell A. Jacobson and his son Allen R. Jacobson through Management Solutions, Inc. and over 200 other entities they controlled.  In addition to the asset freeze, the Court appointed a Receiver to preserve and marshal assets for the benefit of defrauded investors.

According to the complaint, the Jacobsons offered investors the opportunity to invest in limited liability companies (LLCs) to share ownership of large apartment communities in eight states. The SEC alleged that the Jacobsons told investors they would buy apartment complexes with low occupancy rates at significantly discounted prices, renovate the properties, improve management and [aim] to resell them within five years.  According to the complaint, investors were promised they would share in the profits derived from rental income and eventual sales.  The SEC alleged that the LLCs in reality suffered significant losses and the Jacobsons were merely pooling the money from investors into large bank accounts from which they siphoned money to pay family expenses and operating expenses of their various companies.  In addition, the SEC claimed the Jacobsons paid earlier investors with funds received from new investors in classic Ponzi scheme fashion.

For more information about the SEC’s action, you can read Litigation Release No. 22195 (Dec. 15, 2011).

The Court appointed John A. Beckstead as Receiver.  Investors can obtain additional information about the Receivership by visiting the Receiver's website at http://www.managementsolutionsreceivership.com/index.html.