SEC Obtains $15 Million Final Judgment Against Virginia Real Estate Developer

SEC Obtains $15 Million Final Judgment Against Virginia Real Estate Developer

On September 10, 2021, the SEC obtained a $15 million final judgment against Todd Elliott Hitt, a Virginia real estate developer charged with scheming to defraud investors as well as misappropriating investment funds. The court, the United States District Court for the Eastern District of Virginia, found Hitt liable for more than $15 million in disgorgement and prejudgement interest. 

The initial SEC complaint was filed on October 5, 2018, and claimed that Hitt sought investor capital to finance the construction of new residential homes as well as the acquisition of an office building that sits in proximity to Northern Virginia’s WMATA Silver Line Metro Station. Unfortunately for investors, Hitt chose to misappropriate investor funds, commingle investor money and project returns, as well as make Ponzi-scheme type payments to previous investors. 

Additionally, as alleged in the SEC complaint, Hitt also raised $2.5 million in investor funds for a relief defendant entity he managed, then also misappropriated roughly $1.25 million from that endeavor. The disgraced Virginia real estate investor allegedly repurposed those funds to live a lavish lifestyle at the expense of investors. 

In previous proceedings, Hitt agreed to a bifurcated settlement which allowed the court to determine any monetary remedies against him, in addition to a permanent bar on his participation in the securities industry. The court found him liable for disgorgement as well as a prejudgement interest of just over $15 million. Hitt was also charged and convicted in a parallel criminal case, leading to a 78-month prison term, which led to the SEC dismissing all claims for civil penalties and bringing the case to an end. 

The litigation was led by Patrick R. Costello and supervised by Frederick L. Block. Several members of the SEC’s Enforcement Division assisted in the litigation, including Michael Grimes, Shipra Wells, and Daniel Rubenstein, supervised by  C. Joshua Felker. In a related press release, the SEC noted the assistance of the FBI as well as the U.S. Attorney’s Office for the Eastern District of Virginia.