The Securities and Exchange Commission (SEC) announced that it obtained an emergency court order to halt an alleged Ponzi-like scheme operated by Small Business Capital Corp. and its principal Mark Feathers, who raised $42 million by selling securities issued by Investors Prime Fund LLC and SBC Portfolio Fund LLC - two mortgage investment funds they controlled.
The SEC alleges that over 400 investors were promised that profits from mortgage investments would yield annual returns of 7.5 percent or more. When in fact, Feathers operated a Ponzi-like scheme by paying returns to investors that came partly from fund profits and partly from other investors.
“Feathers raised millions from investors by promising high returns,” said John McCoy, Associate Regional Director of the SEC’s Los Angeles Office. “The returns turned out to be too good to be true and were funded in part with new investors’ money.”
In the SEC article they allege that from 2009 to early 2012, Feathers improperly transferred more than $6 million from the funds to Small Business Capital to pay its expenses, including substantial payments to Feathers.
Additionally, the SEC alleges that investors were not told that in February and March 2012, the defendants caused one fund to sell mortgages to the other fund at an inflated price, thus generating a “profit” for the selling fund so it could pay Small Business Capital management fees of more than $575,000. The SEC charged Feathers and Small Business Capital for Small Business Capital’s effecting transactions in the funds’ securities without being registered as a broker-dealer with the SEC.
If your broker recommended you invest in this product, call and speak to an attorney at Soreide Law Group for a free consultation on how to potentially recover your investment losses. Call 888-760-6552, or visit our website at: https://www.securitieslawyer.com.
