Boston Investment Firm Accused of $5 Million Real Estate Investment Fraud Targeting Senior Investors
The state of Massachusetts has filed a complaint against Cabot Investment Properties and its principals Timothy J. Kroll and Carlton P. Cabot. Secretary of the Commonwealth William F. Galvin is charging the firm with defrauding mostly elderly investors through fraudulent real estate investment sales.
The administrative complaints contends that Massachusetts residents wanting retirement income invested over $5 million in eight tenancy-in-common investments and misappropriated more than $9 million of the investment proceeds. Cabot Investment Properties had bought 18 business centers, malls, and other real estate properties in the US and structured them as securities.
Galvin claims that the respondents committed fraud when offering and selling the securities and made omissions and misrepresentations about their backgrounds and the consequences involved in securitizing the underlying TIC mortgages into commercial mortgage-backed securities. He contends that they misled investors by providing disclosures that downplayed how much liability was involved.
The investments were supposed to generate rent for two decades. Instead, Kroll and Cabot comingled funds from the different investments into a number of Cabot Investment Properties holdings. The two men then spent several years wiring millions of these dollars into their own accounts. Meantime, they inflated their reputations. Cabot’s mother had married into New England’s Cabot family, so the respondents bragged about the connection to make themselves seem more legitimate, respectable and prominent.
Unfortunately, senior investors are a favorite target for fraudsters because many of them have money that they want to invest. At Shepherd Smith Edwards and Kantas, LTD LLP, we help investors recoup their defrauded funds. Over the years we have helped thousands of individual investors and institutional investors get their money back.
Boston firm charged in real estate investment fraud, Investment News, June 18, 2014
Read the Complaint (PDF)
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