June 18, 2013 — The Securities and Exchange Commission (SEC) whistleblower program established by the Dodd-Frank Act of 2010 allows for greater efficiency in the SEC’s processing of tips from whistleblowers inside the securities industry. Brokerage and investment firm insiders who discover schemes to defraud investors and pass on unique information to the SEC may be rewarded with up to thirty percent of any monies recovered by the government as a result of the information, provided the recovery tops $1 million.
Oregon Man Indicted for Lying to Investors in Real Estate Securities Operation
The U.S. Justice Department has brought criminal charges against Bradley Holcom of Canby, Oregon, alleging that Holcom conducted a $50 million securities fraud scam involving the sale of promissory notes peddled to over 150 investors across the country between 2004 and 2010. Holcom allegedly sought out investors for the “Trust Deed Investment Program,” a vehicle for the development of both commercial and residential properties. Investors who purchased notes in the Investment Program were to receive a first position lien on a particular piece of property that would enable them to foreclose on the specific development property in the event that Holcom should prove unable to repay the principal due when a purchaser called the note.
Holcom’s promises to investors notwithstanding, the Justice Department has alleged that in actuality Holcom provided investors with a lesser interest that they could not use to foreclose on the properties. Further, many of the properties for which Holcom solicited investments were previously encumbered by first position liens, meaning that subsequent investors could not possibly be granted the same first position liens, despite Holcom’s assurances.
By 2008, Holcom was in financial trouble already, but in soliciting new investors, he allegedly continued for the next two years in misrepresenting his genuine financial condition and the way in which investor monies were being used.
Plots to Defraud Investors Often Discovered by Industry Insiders
Under the whistleblower program established by the Dodd-Frank Act, industry insiders who learn that a company is defrauding investors and shareholders have a way to come forward to put a stop to the misconduct. Before notifying the SEC, however, tipsters need to learn their own rights. The whistleblower lawyers with Waters & Kraus know how to protect the interests of insiders who are courageous enough to collaborate with the government. Contact us by email or phone our securities fraud attorneys at 855.784.0268 to discuss how we can assist you.