On January 25, 2019, the Securities and Exchange Commission announced that it had filed charges against a Texas resident and real estate developer, Phillip Michael Carter, and two other individuals for conducting a multi-million dollar offering fraud. The SEC’s complaint accuses Carter, Bobby Eugene Guess and Richard Tilford of raising nearly $45 million from more than 270 investors across the United States by selling short-term, high-yield promissory notes.
The notes were issued by a handful of shell companies intentionally named to confuse investors. The three men are accused of claiming to offer investments in Carter’s legitimate real estate development companies. They were supposedly backed by hard assets from legitimate real estate development projects. The complaint alleges that the defendants sold securities issues by unrelated yet closely named entities with no assets. Carter is accused of misappropriating investor funds to pay $1.2 million on a personal IRS tax lien, to operate a hunting ranch and to fund his lifestyle.
He is also accused of making more than $3 million in Ponzi payments to investors. The complaint was filed in the federal court in Dallas. It charges the defendants with violating the anti-fraud provisions of the Securities Act and Exchange Act. They’re also charged with participating in the unregistered offer and sale of securities and functioning as unlicensed brokers. Further details can be found here.
