Robert C. Morgan, Morgan Mezzanine Fund Manager LLC, & Morgan Acquisitions LLC Allegedly Offered a Series of Fraudulent Private Securities Offerings in Ponzi-like Fashion

Robert C. Morgan, Morgan Mezzanine Fund Manager LLC, and Morgan Acquisitions LLC allegedly offered a series of fraudulent private securities offerings in Ponzi-like fashion by purportedly using investor funds to make interest and principal redemption payments back to prior investors, and to cover up other mortgage fraud-related conduct, according to a SEC Complaint filed in the Western District of New York and under review by investor rights attorney Alan Rosca.

Attorney Alan Rosca and his colleagues at the Goldman Scarlato & Penny law firm are investigating this matter. They have collected and are currently reviewing a considerable amount of evidence, and are preparing to take action on behalf of victimized Morgan investors. Investors who are concerned they may have lost money invested in the Robert Morgan alleged Ponzi scheme are encouraged to contact attorney Rosca or his colleagues, Paul Scarlato or Doug Bench, to provide useful information or for a free, no-obligation evaluation of their legal options.

Morgan, a developer of residential and commercial real estate projects located primarily in the Northeastern United States, raised over $110 million from investors via sales of securities directly to retail investors, and from said investment, Morgan has allegedly raised at least $80 million from investors in four sets of so-called Note Funds, according to the aforementioned SEC Complaint.

These Notes Funds were supposed to assist Robert Morgan and his companies acquire multifamily residential properties and other real estate development projects, the SEC Complaint states, and Morgan allegedly managed the first three Notes Funds through the Fund Manager, while he operated the fourth Notes Fund through another entity, Morgan Acquisitions.

Morgan has financed these projects using four primary sources of capital:

  • sales of securities directly to retail investors, on which this action focuses;
  • institutional mortgage loan financing, where the loans are then typically securitized as part of commercial mortgage-backed securities issued by either government-sponsored entities such as The Federal Home Loan Mortgage Corporation (Freddie Mac) or private entities;
  • mezzanine financing;
  • construction loans.

Morgan Falsely Told Investors That Their Investments Would Be Used to Make Unsecured Subordinated Loans to Affiliated Morgan-Controlled Entities, the SEC Alleges

Robert C. Morgan, Morgan Mezzanine Fund Manager LLC, & Morgan Acquisitions LLC, by offering memos and other communications, falsely told investors that their investments would be used to make unsecured subordinated loans, or Portfolio Loans, to affiliated Morgan-controlled entities, or Affiliate Borrowers, so that said entities could either acquire, manage, or operate existing multi-family properties or so that they could acquire new real estate development properties, according to the aforementioned SEC Complaint.

Morgan allegedly made statements to investors that they would be paid a target return of 11%, the SEC notes.

Morgan allegedly personally guaranteed the repayment of each Portfolio Loan by each Affiliate Borrower, which he charged interest at a rate sufficient to meet the Notes Funds’ target return to investors, the SEC reports.

For the Notes Funds managed by Morgan Acquisitions, Morgan also allegedly personally guaranteed the investor notes issued by Morgan Acquisitions to the individual investors, the SEC Complaint reports.

In reality, the SEC alleged, investor money was improperly diverted from its stated purpose, and misused in Ponzi-scheme fashion. Specifically, investor money was re-routed through various accounts and sent to Morgan-controlled entities different from those in which the investors thought they were investing, and/or was used to pay redemptions or distributions to existing investors, in Ponzi fashion, according to the SEC’s Complaint.

The SEC’s case against Robert Morgan and the entities he controls, Morgan Mezzanine Fund Manager and Morgan Acquisitions, is pending. As of the date of this article, no judgment has been entered as to the complaint mentioned in this article.

Securities Lawyers Investigating

The Goldman Scarlato & Penny PC law firm’s investment fraud lawyers, Alan Rosca and his colleagues, are currently investigating Robert C. Morgan, Morgan Mezzanine Fund Manager LLC, & Morgan Acquisitions LLC’s  alleged offering of a series of fraudulent private securities offerings in Ponzi-like fashion, and are looking to talk to investors. The firm represents investors who lose money as a result of investment-related fraud or misconduct, and takes most cases of this type on a contingency fee basis and advance the case costs, and only gets paid for their fees and costs out of money recovered for clients. Attorney Alan Rosca, a securities lawyer and adjunct professor of securities regulation, has represented thousands of victimized investors across the country and around the world in cases ranging from arbitrations to class actions.

Investors who believe they lost money as a result of Robert C. Morgan, Morgan Mezzanine Fund Manager LLC, & Morgan Acquisitions LLC’s  alleged offering of a series of fraudulent private securities offerings in Ponzi-like fashion, and is looking to talk to investors may contact attorneys Alan Rosca, Paul Scarlato, or Doug Bench for a free no-obligation evaluation of their recovery options, at 888-998-0530, via email at rosca@lawgsp.com, or through the contact form on this webpage.

filed under: Investigations

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