Real Estate Fund Manager Fined $12 million for Fraud
SEC Litigation Released March 15, 2022
GowerCrowd- In the long-awaited conclusion of a year-long real estate fraud case, the Securities and Exchange Commission announced the entry of final consent judgments against real estate fund manager Eric C. Malley, alongside his company, MG Capital Management L.P. The March 14, 2022 judgments order Malley, alongside two related entities under his control, to pay $12 million to resolve charges brought by the SEC against them, including charges related to defrauding investors via real estate funds under the control of MG Capital.
The initial complaint was filed on January 12, 2021, in federal court in the Southern District of New York. In the complaint, the SEC alleges that starting in 2014, Malley and MG Capital solicited investments for two real estate funds, MG Capital Management Residential Funds III and IV, and raised $58 million despite the fact that Malley, a licensed real estate broker, had no investment management experience. The SEC contends that he was able to raise these funds due to the false investment track record fabricated by Malley.