SEC Says California Man Ran Real Estate Investment FraudJoshua Gallu
The U.S. Securities and Exchange Commission accused a California man of defrauding almost 500 investors through a purported private-equity real estate firm.
Larry Polhill sold investors unregistered notes promising to yield annual returns of 5 percent to 17 percent when the collateral backing the investments was often non-existent or otherwise impaired, the SEC said in a statement today. The investors are now owed about $160 million by Polhill’s bankrupt firm, according to the agency.
In settling the claims, Polhill agreed to be barred from acting as an officer or director of a public company. The settlement is subject to approval by the U.S. District Court for the Central District of California, which will decide any monetary sanctions at a later date.
“Mr. Polhill has neither admitted nor denied any of the allegations in the SEC’s complaint, which have not been adjudicated by any court,” his attorney, Michael Quinn of K&L Gates LLP, said in an e-mailed statement. “Mr. Polhill is pleased to have this matter behind him.”
According to the SEC, Polhill, 61, used his company, San Bernardino, California-based American Pacific Financial Corp., to buy and sell real estate and distressed assets, offering clients the chance to invest through the unregistered notes. The properties underlying the investments were sometimes sold without notice to the investors, the agency said.
The company made regularly scheduled interest payments to investors from the mid-1980s to 2007, the SEC said. In early 2008, APFC ceased making the payments to most investors, yet continued to issue newsletters, pay preferred investors and engage in other activities designed to create a false sense of security about the investments in the company, according to the agency.
When APFC eventually filed for bankruptcy, it named the investors as unsecured creditors who were owed almost $160 million, the SEC said.
“Polhill falsely presented investment opportunities that were safe and reliable based on collateral that didn’t always exist, and his fraudulent misrepresentations left investors with nothing to show for their investments when APFC declared bankruptcy,” Michele Wein Layne, director of the SEC’s regional office in Los Angeles, said in a statement.