SEC Charges Arizona Man with Misappropriating Money from Investors in His Real-Estate Lending Company
Dec. 6, 2021
File No. 3-20668
December 6, 2021 - The Securities and Exchange Commission today announced settled charges against Steven A. Turner for misappropriating over $9 million of investor funds from his mortgage lending company, Coyote Capital Investments, LLC.
According to the SEC's order, Turner started Coyote Capital for the purpose of hard money lending, i.e., providing short-term, high-interest rate loans to borrowers who typically purchased dilapidated housing, improved the property, and then resold it within months of purchase. Over the course of the next decade, Turner raised funds from Coyote Capital's investors by promising that their money would be used to make real estate loans secured by property liens. However, the SEC's order finds that, from October 2015 through May 2020, Turner diverted most of the money he raised to a start-up online gaming company without informing Coyote Capital's investors or receiving their authorization. Turner also caused Coyote Capital to transfer around $350,000 to his own accounts to pay his personal expenses. Turner continued this conduct even after Coyote Capital stopped making interest payments to its investors in early 2019 and failed to return their principal.
The SEC's order finds that Turner violated the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Turner agreed to cease and desist from future violations of these provisions, be barred from serving as an officer or director of a public company, comply with certain undertakings, and pay disgorgement of $9,776,332 and prejudgment interest of $1,458,107. The full amount of disgorgement and prejudgment interest has been deemed satisfied based on the Restitution Order entered against Turner in United States v. Turner, Crim. No. 21-00056-JAT (D. Ariz.). The District Court sentenced Turner to 60 months in prison.
The SEC's investigation was conducted by John Rossetti and Matthew Finnegan, with the assistance of Timothy Halloran of the Trial Unit, and supervised by Jeff Leasure and Anita B. Bandy. The SEC appreciates the assistance of the U.S. Attorney's Office for the District of Arizona and the Federal Bureau of Investigation.