SEC Charges Brent Borland with Misappropriating Investor Assets
Litigation Release No. 24147 / May 18, 2018
Securities and Exchange Commission v. Brent Borland, et al., Civil Action No. 18-cv-4352 (S.D.N.Y., filed May 16, 2018)
On May 16, 2018, the Securities and Exchange Commission charged Brent Borland and two of his companies with misappropriating close to $6 million in investor funds intended to finance an international airport in Belize.
The SEC's complaint alleges that between 2014 and 2017, Brent Borland sold more than $21 million of promissory notes to dozens of investors, promising that the funds would be used as bridge financing for development of an international airport in Placencia, Belize and that the investments would be protected by pledges of real estate as collateral. Borland marketed and sold the notes through two companies, Borland Capital Group LLC, which purports to be active in "alternative investment," and Belize Infrastructure Fund I, LLC, which purports to be in the business of construction finance.
The complaint alleges that Borland used millions of dollars of investor funds for personal expenses and unrelated business expenses, including mortgage and property tax payments on his family's Florida mansion, multiple luxury automobiles, private school tuition for his children, $36,000 for his family's beach club membership, and almost $2.7 million to pay off credit cards. Borland also allegedly deceived investors by pledging the same collateral to multiple investors.
The SEC's complaint filed in the Southern District of New York alleges that Borland, BCG and Belize Fund with violating Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The SEC seeks, among other relief, asset freezes as to Borland and his companies, an accounting of investor assets, disgorgement of Borland's ill-gotten gains and civil penalties. The complaint also names as relief defendants Borland's wife, Alana LaTorra Borland, and a corporation controlled by Borland and his wife, Canyon Acquisitions, LLC. The SEC seeks to recover investor proceeds that Borland transferred to the relief defendants.
In a parallel action, the U.S. Attorney's Office for the Southern District of New York announced criminal charges against Borland who was arrested earlier in the day. The SEC's investigation, which is continuing, was conducted by Andrew O'Brien and Donald Ryba and supervised by C.J. Kerstetter. The SEC's litigation will be led by Benjamin Hanauer and Timothy Leiman.