SEC charges Florida real estate developer Rishi Kapoor with $93M fraud

According to the SEC's complaint, from approximately January 2018 until at least March 2023, Kapoor and certain of the defendant entities solicited investors by, among other things, making several material misrepresentations and omissions regarding Kapoor, Location Ventures, Urbin, and their real estate developments.

The false statements allegedly included misrepresenting Kapoor's compensation; his cash contribution to the capitalization of Location Ventures; the corporate governance of Location Ventures and Urbin; the use of investor funds; and Kapoor's background. The SEC's investigation uncovered that Kapoor allegedly misappropriated at least $4.3 million of investor funds and improperly commingled approximately $60 million of investor capital between Location Ventures, Urbin, and some of the other charged entities.

The complaint also alleges that Kapoor caused some entities to pay excessive fees and to represent higher returns to investors by significantly understating cost estimates.

The SEC's complaint, filed in the U.S. District Court for the Southern District of Florida, charges Kapoor, Location Ventures, and Urbin with violating Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The SEC also charges the other 20 related entities with violating Section 17(a)(1) and (3) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5(a) and (c) thereunder.

The SEC further alleges Kapoor, as a control person of the corporate entities, is liable under Section 20(a) of the Exchange Act. The SEC seeks permanent injunctions, civil monetary penalties, an officer-and-director bar against Kapoor, and disgorgement of ill-gotten gains with prejudgment interest against Kapoor and certain of the charged entities.

The SEC's continuing investigation is being conducted by Jordan A. Cortez, John T. Houchin, Fernando Torres, and Mark Dee, and supervised by Eric R. Busto and Glenn Gordon, with the assistance of Russell R. O'Brien and Regional Trial Counsel Teresa Verges. The litigation will be led by Mr. O'Brien and will be supervised by Ms. Verges.

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Original text here: https://www.sec.gov/litigation/litreleases/lr-25921