U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23750 / February 14, 2017
Securities and Exchange Commission v. James P. Toner, Jr., Civil Action No. 17-Civ-1111 (S.D.N.Y., filed February 14, 2017)
PURPORTED REAL ESTATE INVESTMENT MANAGER SETTLES FRAUD CHARGES
Washington D.C., Feb. 14, 2017 - The Securities and Exchange Commission today announced that a purported real estate investment manager has agreed to pay more than a half-million dollars to settle charges that he pocketed investor money in an investment scheme.
The SEC alleges that James P. Toner Jr. of Scottsdale, Ariz., siphoned $51,000 from investors who were falsely told that he would personally manage some of the real estate projects in which they were purchasing interests. The stated purpose of each investor offering was to purchase a residential property in the Phoenix area, renovate that property, and then sell it for a profit.
According to the SEC's complaint, Toner took $31,000 in undisclosed management fees even though he did not manage any of the offerings, and stole $20,000 directly from an investor. Without conducting any due diligence, Toner allegedly entrusted the management of the investments to a real estate broker who subsequently squandered investor funds. According to the SEC's complaint, the real estate broker was later imprisoned for other crimes.
In addition to falsely stating that he planned to personally manage some of the properties, Toner allegedly told investors he would make personal investments in the projects when in fact he never did. In order to skirt the registration requirements for the offerings, Toner allegedly instructed some investors to falsely state that they were accredited investors.
Without admitting or denying the allegations, Toner consented to the entry of a court order requiring him to pay disgorgement of $51,358 plus interest of $4,893.98 and a penalty of $450,000. The settlement is subject to court approval.
The SEC's investigation was conducted in the New York Office by Jorge G. Tenreiro, Elizabeth Butler, and Sandeep Satwalekar, and the case was supervised by Sanjay Wadhwa. The SEC appreciates the assistance of the Internal Revenue Service, U.S. Attorney's Office for the District of Arizona, and Pennsylvania Attorney General's office.