SEC Charges Real Estate Developer with Fraud in Project Tied to New Commuter Rail Station
Litigation Release No. 24307 / October 5, 2018
Securities and Exchange Commission v. Todd Elliott Hitt, Kiddar Capital LLC, Kiddar Group Holdings, Inc., as Defendants, and Kiddar Herndon Station LLC, Kiddar Homebuilding Fund I LLC, Melbourne Retreat LLC, Kiddar Mass Ave LLC, Kiddar Ridgeview LLC, ESA Emerson LLC, ESA Highwood LLC, and Kiddar AQ LLC a/k/a Kiddar Aquicore LLC, as Relief Defendants, No. 1:18-cv-01262 (E.D. Va. Oct. 5, 2018)
The Securities and Exchange Commission today charged a Virginia real estate developer with skimming investor funds that were intended for use in purchasing an office building near the site of a planned commuter rail station on the Washington Metropolitan Area Transit Authority's Silver Line. The complaint also alleged commingling and misappropriation of investments in various real-estate and other projects.
As alleged in the SEC's complaint, over at least a four year period, Todd Elliott Hitt used two of his companies - Kiddar Capital LLC and Kiddar Group Holdings, Inc. - to raise more than $20 million from investors for the purpose of acquiring and operating the Silver Line office building, new home construction in Northern Virginia, and a fund managed by Hitt that invested in a start-up business. The SEC alleges that Hitt made misrepresentations about his own investments in the ventures and misappropriated several million dollars of investor funds to support his extravagant lifestyle and make Ponzi-like payments to prior investors.
As part of his settlement with the SEC, the terms of which remain subject to court approval, Hitt consented to entry of a judgment freezing his assets and imposing conduct-based injunctions that enjoin him from participating in the offer or sale of interests in real estate development companies. Hitt has also consented to the appointment of a receiver over a number of the corporate defendants and relief defendants. Under the terms of the proposed settlement, the Receiver would protect investors, prevent asset dissipation and loss, and attend to the businesses. Penalties and disgorgement would be determined by the court at a later date.
The SEC's complaint, filed in the United States District Court for the Eastern District of Virginia, charges Hitt, Kiddar Capital, and Kiddar Group with violating Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and also charges Hitt with violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940.
The investigation has been conducted by Daniel H. Rubenstein, Michael T. Grimes, Keith A. O'Donnell, Michael S. Fuchs, Shipra G. Wells, and Paul Harley, and supervised by C. Joshua Felker. Patrick Costello and Nicholas Margida will lead the SEC's litigation under the supervision of Fred Block.
The SEC appreciates the assistance of the Federal Bureau of Investigation and the United States Attorney's Office for the Eastern District of Virginia.