SEC Charges Real Estate Company and its Founder with $8.75 Million Offering Fraud
Litigation Release No. 24575 / August 27, 2019
Securities and Exchange Commission v. Hartman Wright Group, LLC and Tytus W. Harkins, No. 19-cv-02418 (D. Colo. filed Aug. 26, 2019)
The Securities and Exchange Commission filed charges against Hartman Wright Group, LLC, a real estate company, and its founder, Tytus W. Harkins, for raising over $8 million in an unregistered real estate-based offering fraud.
According to the SEC's complaint filed in the U.S. District Court for the District of Colorado, Hartman Wright Group, a Colorado company, and Harkins, a Montana resident, have operated a fraudulent scheme since January 2015, raising more than $8 million from at least 25 investors. The complaint alleges that Hartman Wright Group and Harkins solicited investors through paid finders, mailing lists, seminars, and the company's website, telling investors that the company found distressed or undervalued mobile home parks, purchased them and made capital improvements, and then sold them for a profit. The SEC alleges that Hartman Wright Group and Harkins promised investors a specified rate of return, and equity ownership in some cases. According to the SEC's complaint, investors received monthly interest payments, which were often paid using other investor funds. The complaint further alleges that Hartman Wright Group and Harkins overstated the purchase price on properties to hide fees Hartman Wright Group paid itself, failed to use investor money for the specific properties as represented, misrepresented amounts invested in properties, and overstated Hartman Wright Group's financial position.
The SEC's complaint charges Hartman Wright Group and Harkins with violating the registration and antifraud provisions of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks permanent injunctions, disgorgement plus prejudgment interest, and penalties.
The SEC's investigation was conducted by Matthew L. Skidmore and supervised by Mary S. Brady of the Denver Regional Office. The SEC's litigation is being led by Stephen C. McKenna and Terry R. Miller, and supervised by Gregory Kasper.