Securities Division warns real estate investors about scam projects

Courtesy Arizona Corporation Commission

Courtesy Arizona Corporation Commission

KINGMAN – The Arizona Corporation Commission’s Securities Division is warning about real estate scams and investments in projects that are not found on any stock exchange.

Investors should take time to conduct research before putting any money into an unregistered real estate venture.

These scams tout above-market returns with little to no risk and little effort required of investors outside of contributing funds to the project.

Scammers typically solicit investments by phone, or they’ll advertise informational workshops about how to become wealthy by investing in real estate.

While it sounds enticing, investors are encouraged to find out what the project entails and should base their investment decision on concrete financial information such as tax returns and accounting data, not on estimates and projections.

“Often touted is the promoter’s success in real estate investing; however in some instances a simple internet search would show otherwise,” said Arizona Corporation Commission Chairman Tom Forese.

“Investors tend to ignore this simple, yet crucial, step in their research of potential investments because the promoter utilizes high pressure sales tactics that demand action immediately before the opportunity evaporates.”

The Securities Division recently brought action against two fraudulent real estate investment scams. USA Barcelona Realty Advisors was ordered to pay more than $1.2 million in restitution and $450,000 in administrative penalties for securities violations relating to a capital raising plan to build hotels because investors were not told that certain promoters had a prior failed real estate venture and a prior criminal conviction related to investment fraud.

The Commission also ordered Jason Todd Mogler and Tri-Core Companies to pay $4.4 million in restitution and $400,000 in administrative penalties relating to a promissory note scheme in connection with a Mexican land investment.

Prior to investing in any real estate-related project, potential investors should get verifiable answers from the promoter in writing to the following questions:

• Are you registered to offer and sell investments in Arizona? If not, why?

• Have you ever been sued, convicted, or disciplined by a law enforcement agency?

• How and when do I get my money out of the investment?

• What are my rights should the company go bankrupt?

Investors can find more information on the commission’s investor education website at azinvestor.gov. Also, check with the investigator on duty by calling 602-542-0662 or emailing securitiesdiv@azcc.gov.

Information provided by Arizona Corporation Commission