Florida Court Grants Permanent Injunction

Patrick Kirkland, the primary architect of a fraudulent securities scheme involving the sale of real estate investments known as triplexes, was sued by the Securities and Exchange Commission. The United States District Judge for the Middle District of Florida granted the Commission’s motion for summary judgment against Kirkland and permanently enjoined him from further violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, thereunder. The order also granted the Commission’s claim for disgorgement with prejudgment interest against Kirkland and will hold a hearing to determine the amount Kirkland must disgorge. In addition, the Court reserved ruling on a specific civil penalty amount the Defendant must pay, pending the Commission’s motion.

The Commission’s complaint in this matter, filed on February 16, 2006, alleged that from April 1999 until the date of the complaint, Kirkland and the other Defendants raised at least $59 million by offering and selling unregistered securities in the form of investments in real estate developments located in Florida, Georgia, and Texas. According to the complaint, the Defendants were selling investments called triplexes, which were apartments designed for shared senior rental living. The complaint further alleged that Defendants promised investors exorbitant profits of 23% to 55%, and through sales agents, falsely assured prospective investors that over 200 calls a day were coming in from seniors interested in leasing the properties, and that there was a waiting list. In fact, according to the complaint, the completed developments had rental rates of 34% or less, and investors who purchased triplexes lost money.

In his summary judgment order, the Court found the Commission had proved the violations alleged in the complaint, and that Kirkland violated the registration and anti-fraud provisions of the federal securities laws in selling the triplexes. The Court ruled that Kirkland‘s representations to investors had no basis in fact, were often flatly false and his actions were deliberate and knowing. The Court also concluded, Kirkland‘s conduct revealed a lengthy pattern of wrongful behavior, which included, among other things, falsifying leases, inflating appraisal values, promising rates of returns without a reasonable basis, and failing to mention investors’ class action and individual lawsuits, two desist-and-refrain orders and a temporary restraining order issued by the State of California.

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source: mortgagefraudblog.com