U.S. Securities and Exchange Commission issued the following announcement on Jan. 25.
The Securities and Exchange Commission announced today that it filed charges against Texas resident and real estate developer Phillip Michael Carter, two other individuals, and several related entities for conducting a multi-million dollar offering fraud.
The SEC's complaint alleges that Carter, along with Bobby Eugene Guess and Richard Tilford, raised almost $45 million from over 270 investors across the United States by selling short-term, high-yield promissory notes issued by a number of shell companies intentionally named to confuse investors. The complaint alleges that Carter, Guess, and Tilford claimed to offer investments in Carter's legitimate real estate development companies, which were purportedly backed by hard assets from actual real estate development projects. Instead, the complaint alleges, the individual defendants sold securities issued by unrelated, but closely-named, entities that had no assets. Carter then misappropriated investor funds to pay $1.2 million towards a personal IRS tax lien, operate a luxury hunting ranch, fund his lifestyle, and make over $3 million in Ponzi payments to investors.
"Phillip Carter and his co-defendants lied about the nature of their investments and enriched themselves at their investors' expense," said Shamoil T. Shipchandler, Director of the SEC's Fort Worth Regional Office, whose last day at the Commission is today.
The complaint, filed in federal court in Dallas, charges the defendants with violating the anti-fraud provisions of the Securities Act and Exchange Act, participating in the unregistered offer and sale of securities, and functioning as unlicensed brokers, and seeks permanent injunctions, conduct-based injunctions, disgorgement with prejudgment interest, and civil penalties. The complaint also charges four entities as relief defendants, seeking disgorgement and prejudgment interest. Finally, the SEC's complaint seeks an asset freeze, accounting, and document preservation order over Carter and several entities to protect and preserve assets for the benefit of investors.
In related criminal proceedings pursued by the Texas State Securities Board, Carter and Tilford were indicted on November 6, 2018, for, among other things, securities fraud, sales of unregistered securities, and sales of securities by an unregistered agent or dealer. Those charges remain pending.
The SEC's investigation was conducted by Jason A. Braun and Michelle Lama, and supervised by Jim Etri, B. David Fraser, and Eric R. Werner. The litigation is being conducted by Matt Gulde. The SEC acknowledges the assistance and cooperation of the Texas State Securities Board.
Original source can be found here.