Leonard Vincent Lombardo, a former broker once employed at Stratton Oakmont, is now charged by the US Securities and Exchange Commission, along with his company and business partner, with involvement in an alleged real estate investment scam that defrauded over 100 investors, including retirees, of $6M. Lombardo, his firm The Leonard Vincent Group (TLVG), and CFO Brian Hudlin have settled the SEC charges.
According to the regulator’s complaint, investors were told that their money would be placed in “distressed real estate” and their money would grow by over 50 percent within months when, in fact, the investments did not make real earnings.
For their investments, investors were given shares or units in an LVG fund. They were under the impression that the funds were to be pooled with other investors’ money and then, according to the strategies in the LVG Funds’ Private Placement Memoranda, collectively invested in the distressed real estate.
High pressure sales tactics were allegedly used by a sales team that included ex-registered representatives, who targeted former customers and prospective investors. Most of the targets were elderly persons.
In total, over $6.5M were raised for these supposed real estate investments. The SEC said that only $1.5M was used to buy or renovate properties.
Also, investors were offered “membership units” in Clearette, which was an e-cigarette product distributor owned by Lombardo. For this, he raised about $686K directly from investors and received at least $2M from investors who had backed other LVG Funds. He touted strong returns and even greater profits than what investors were supposed to make.
Lombardo invested just a small amount of investors’ money as promised. Instead, he allegedly used most of their funds for other business ventures and to pay for his own expenses, including marina fees for his boat, tanning salon services, and car payments.
Now, TVLG and Lombardo most pay almost $5.9M of disgorgement. Hudlin, who is not denying or admitting to the SEC’s allegations against him, will pay a $40K penalty.
Meantime, Lombardo, who was barred from the securities industry for lying to investors in 2001, has plead guilty in a parallel criminal case brought by New York prosecutors.
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