Kiddar Capital CEO Todd Hitt Charged With Securities Fraud
Hitt surrendered to the FBI on Friday and appeared in federal court in Alexandria, Virginia, after investigations by the Justice Department, the FBI and the Securities and Exchange Commission revealed an alleged $16M scheme to defraud investors in his private equity firm and its affiliates.
The charges allege Hitt and his company engaged in a four-year scheme to solicit outside investment in projects while misrepresenting and omitting important facts and illegally commingling investor funds.
From September 2014 to last month, the SEC said Hitt raised at least $20M from at least 29 investors for a D.C.-area office building, Northern Virginia homebuilding projects and a startup, PropTech firm Aquicore.
Hitt allegedly kept money from investors to himself rather than putting it into projects and used it to pay off $222K of credit card debt. The U.S. Attorney's office said he used his allegedly fraudulent gains to fund a lavish lifestyle of rented private jets, sports tickets and jewelry. He used subsequent investments to make "Ponzi-like" payments to previous investors, the SEC wrote in a statement.
Kiddar's most recent acquisition, a 4.8-acre office building and development site near the future Herndon Silver Line station for $33M, was a key point of the charges. Hitt allegedly misled investors by claiming he had put $6M of his own equity into the purchase.
Kiddar claimed to be a global firm with $1.4B under management with offices in Houston, London and Florida. The SEC wrote in its complaint that Kiddar only had one office — in Falls Church — and managed far less than $1B.
"In the spring of 2018, certain employees at Kiddar Capital who had access to the general ledger ... were only able to come up with a possible valuation of approximately $27 million in assets," the complaint reads. "As an example, an internal portfolio summary as of March 26, 2018 of Kiddar Capital’s Venture Portfolio listed total investments of approximately $1.6 million."
Hitt settled with the SEC and agreed to let the federal government appoint a receiver for his companies and freeze his assets.
The company has taken down its website and deleted its Twitter account, and Hitt deleted his personal Twitter account, though it is unclear when the deletions occurred.
Hitt is the grandson of the founders of Hitt Contracting, one of the largest construction firms in the D.C. metro region.
Read the full SEC complaint against Todd Hitt below: