The Florida real estate market is currently grappling with a surge in fraudulent schemes and subsequent legal actions. Several recent cases highlight a pattern of deceptive practices targeting investors, leading to significant financial losses and a growing number of investigations and arrests across the state. These incidents underscore the risks associated with real estate investments and the importance of due diligence.
Key Takeaways
- Multiple individuals and firms are under investigation or have been sentenced for real estate investment fraud.
- Schemes often involve Ponzi-style tactics, false promises of high returns, and misuse of investor funds.
- Authorities are actively pursuing cases, leading to arrests, indictments, and prison sentences.
- The total financial impact of these frauds is substantial, with millions of dollars lost by investors.
RAD Diversified REIT Inc. Under Investigation
A Tampa-based real estate investment firm, RAD Diversified REIT Inc., along with its owners Brandon “Dutch” Mendenhall and Amy Vaughn, is currently under investigation by the Florida Attorney General’s Office. The investigation stems from numerous complaints alleging that the company is pocketing investor cash instead of purchasing properties as advertised. The Attorney General’s Office suspects a Ponzi scheme and is seeking evidence of deceptive practices, including communications with customers and financial records. Subpoenas have been issued, demanding a response from the company and its owners.
Arrest in Ponzi-Style Real Estate Scheme
Jerald Benjamin Clawson, a 74-year-old Florida man, has been arrested by the Florida Department of Law Enforcement (FDLE) on charges of organized scheme to defraud and unlawful use of unregistered securities. Clawson allegedly solicited real estate investments through cash and bridge loans, promising guaranteed returns that never materialized. The FDLE investigation revealed that investor funds, amounting to several million dollars, were used for Clawson’s personal benefit. This is not Clawson’s first encounter with the law, as he was previously involved in a similar fraud scheme in 2001 that defrauded over 2,000 investors.
Real Estate Investor Sentenced for Tax Fraud
Brian Davison, a former CEO of the Tampa-based real estate investment firm Equialt LLC, has been sentenced to three years in federal prison for filing fraudulent tax returns. Davison underreported his income by at least $29.7 million between 2018 and 2020, resulting in a tax loss of $6.29 million to the federal government. Equialt LLC itself was previously placed under judicial receivership following an SEC complaint related to an alleged fraudulent offering that raised over $170 million from more than 1,100 investors.
Boca Raton Man Charged in $410K Real Estate Scam
Felipe Souza, a 27-year-old man from Boca Raton, faces charges for a real estate scam that defrauded 16 investors out of more than $410,000. Souza allegedly promised exorbitant returns, between 200% and 338%, on non-existent real estate deals. Investigations revealed that investor funds were not used for legitimate business purposes but were instead transferred to an associate, Michael Campbell, and used for personal expenses by both individuals. Neither Souza nor Campbell were licensed to sell securities or real estate in Florida.
Broader Impact on Florida’s Market
These cases collectively highlight a concerning trend in Florida’s real estate investment sector. The total losses reported in these incidents amount to tens of millions of dollars, with investigations revealing sophisticated methods used by fraudsters to exploit unsuspecting investors. The Florida Office of Financial Regulation and the Securities and Exchange Commission are actively involved in uncovering and prosecuting these schemes, emphasizing the need for increased vigilance among potential investors.
Florida real estate market sees fraud schemes and legal actions.
- Tampa real estate investment firm under investigation for potential deceptive practices, Florida Politics.
- 74-Year-Old Florida Man Arrested in Real Estate Investment Fraud Scheme, Weekly Real Estate News.
- Florida investment fraud losses rise to over $100 million, The Business Journals.
- Florida Real Estate Investor Sentenced for $6.29 Million Tax Fraud, Weekly Real Estate News.
- Boca Raton man nabbed for $410K real estate scam, duping 16 investors, WPEC.