The Securities and Exchange Commission reached a settlement in the case of two South Florida men accused of securities and real estate fraud. The defendant in Fort Lauderdale federal court will pay millions of dollars in fines and restitution after diverting more than $1 million in investor funds to unregistered securities.
This case combines elements of real estate fraud and a Ponzi scheme, resulting in significant loss for unsuspecting clients.
Unregistered securities fraud
The primary plaintiff, Larry Brodman of Coral Springs, allegedly funded a residential real estate investment firm by selling more than $9 million in unregistered securities. This firm, Property Income Investors, then paid client commissions for properties to sales agents who did not have the required broker licenses.
Illegal sales tactics
PII sold more than $9 million in these fraudulent securities to more than 150 investors in 26 states. These individuals expected to receive half of the company’s real estate sales and 70% of rental profits. However, while PII bought 12 properties, reselling three and renting the rest, they did not distribute profits to investors as expected.
The lawsuit also named agent Anthony Nicolosi, formerly known as Anthony Pelosi, for using high-pressure sales tactics and misleading clients. Nicolosi changed his name without notifying clients in an attempt to elude SEC investigators.
The SEC says that the PII scam lasted from January 2016 through September 2020. Brodman and Nicolosi neither denied nor admitted to the allegations, but must pay a civil penalty and appear in court at a later date to address the fraud allegations.