SoCal ‘Dealmaker’ Duped Real Estate Investors Out Of Millions, SEC Claims
The Securities and Exchange Commission this week announced it has filed charges against a Santa Clarita man and five entities he owns and controls, alleging that between 2015 and 2020, he orchestrated four unregistered and fraudulent real estate investment offerings, raising more than $9M from more than 100 investors.
Matthew J. Skinner, who marketed himself as a successful real estate investor and “dealmaker,” offered tips on a number of online platforms about real estate investing.
But the complaint filed by the SEC with the U.S District Court for the Central District of California alleges multiple instances of Skinner misrepresenting where investor money would go, how it would be used and the returns that investors should expect through five entities: Empire West Equity Inc., Bayside Equity LP, Longacre Estates LP, Freedom Equity Fund LLC and Simple Growth LLC.
Skinner also made a number of false statements to investors to conceal his alleged fraud, “including blaming the economic impact of the COVID-19 pandemic for the failure to make payments,” according to the complaint.
Skinner and Bayside Equity LP raised $3.1M from investors who were told they would receive an interest in two to-be-developed waterfront residences in Newport Beach. Skinner and entities he controls “misrepresented the extent of Skinner’s interest in this project, inflated the projected returns, and sent only $2M to the project, spending the remaining $1.1M on unrelated things, including substantial personal expenses,” such as vacations and payments on a Maserati, the SEC wrote in the complaint.
In the case of Longacre Estates, the SEC charges that Skinner and his entities raised $2.4M from investors who thought they were investing in the purchase and development of four residential lots in Granada Hills. The SEC alleges $1.2M of that money went to “marketing costs, personal expenses and a different real estate project.”
Through Simple Growth LLC, Skinner raised more than $1.3M, “telling investors he would invest their money in multifamily real estate and guaranteeing double-digit returns ‘no matter what.’” Instead, the money went to payroll, personal expenses and “Ponzi-like payments,” the SEC charges.
The Freedom Fund raised more than $2.6M that was supposed to be for the purchase and renovation of an Arizona multifamily building. Of that sum, $1.1M went to another Skinner-controlled entity, Empire West, the SEC claims. Skinner has also failed to pay back 16 retail investors approximately $800K in principal, according to the SEC.
“Those attempting to raise money in private offerings must still fully comply with the federal securities laws,” SEC Los Angeles Regional Office Director Michele Wein Layne said in a statement. “Skinner allegedly defrauded investors with false promises while misappropriating their money.”
The SEC has charged Skinner with violating securities registration requirements, fraud, and violating laws related to the unregistered offering and selling of securities.
The SEC’s complaint seeks, among other things, to make Skinner pay penalties associated with the violations he is charged with, to have him turn over any money he still has or controls that is associated with the alleged illegal actions, and to permanently prevent Skinner or an entity controlled by him from receiving any additional money relating to the in-progress real estate developments involved in the complaint.