In 2018, the Securities and Exchange Commission (SEC) announced an emergency motion to halt securities offerings made by three California-based real estate investment companies. This action came following allegations that the companies were part of a multi-million dollar real estate Ponzi scheme. The agency brought the charges against:
- Susan Werth (Susan Worth) of San Diego, California;
- Corporate Mystic, LLC;
- Commercial Exchange Solutions, Inc; and
- Exchange Solutions Company
All three companies are controlled primarily by Ms. Werth. Here, our Ponzi scheme attorneys provide an overview of the investment fraud charges brought by federal regulators.
Allegations: $26 Million Real Estate Ponzi Scheme
In a complaint filed in the United States District Court for the Central District of California, the SEC alleges that Susan Werth used three companies to raise more than $26 million from at least 17 different investors. According to the agency, Ms. Werth made a number of wholly false misrepresentation to investors in order to induce them into putting their money into her companies. Among other things, she stated that:
- The investments would be used to fund short-term loans for tax-deferred real estate projects; and
- Investors could expect a 50 percent return in as little as 45 days.
In reality, the SEC contends that the entities operated by Ms. Werth were fraudulent. There were no legitimate real estate projects, and investor money was not being used to fund short-term real estate loans. Instead, it was simply being shuffled around: the original investors were being repaid with the money from new investors — a typical Ponzi scheme tactic. In addition, a substantial amount of money was siphoned off to pay for Ms. Werth’s personal expenses. To help induce investment, the SEC alleges that Ms. Werth presented forged bank statements to actual and prospective investors.
Get Help From Our Investment Fraud Lawyers Today
At Sonn Law Group, our law firm is committed to fighting for the rights of investors nationwide. If your money in a real estate Ponzi scheme or any other type of investment fraud, we are here to help. To set up a risk-free initial consultation, please contact us today.
Disclaimer: This article contains opinions and NOT statements of fact in any way whatsoever. The information here is general information that should not be taken as legal advice. NO attorney-client relationship is established between you and our attorneys by reading this article. This article is attorney advertising and should not be used as a substitute for legal advice from a qualified securities lawyer.