SEC Wins Judgement Against Georgia CRE Firm Owner That Defrauded Investors
SEC Litigation Released January 6, 2021
GowerCrowd- In November of 2021, the United States District Court for the Northern District of Georgia entered a final judgement against a Georgia company Owner, Russell Craig, and his company, OneStep Financial Services, LLC, in a scheme to defraud investors out of more than $1.3 million. According to a complaint filed by the SEC on September 28, 2018, Craig persuaded investors to invest in two different real estate fraud schemes, soliciting more than $1.3 million from at least six investors.
Craig promised high returns and misled investors by stating that their funds would be held in escrow and used to obtain “proof of funds” for the purchase of a condo property, or that investor funds would be invested in real estate projects. He also misrepresented to investors that, after the purchase of the property, they would receive the return of their principal in addition to a 30% profit shortly thereafter.
However, instead of making good on these promises, Craig misappropriated investor funds, including transferring funds to bank accounts under his control or transferred the funds to third parties. Craig also encouraged investors to take out loans to generate funding for the investment, and told investors that he would make loan payments with his funds until the close of the transaction.
Instead of doing this, Craig used escrowed investor funds to make those payments. The SEC also alleges that OneStep and Craig engaged in a similar fraud scheme in 2017, where at least five investors were defrauded when told funds would be used for a real estate project said to cost $460,000 with guaranteed high profits- similar to the current charges, Craig also misappropriated those funds for his own purposes.
Outlined in the SEC complaint are charges against both Craig and OneStep, more specifically with violations of antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. Judge Leigh Martin May of the United States District Court for the Northern District of Georgia entered the final judgement against OneStep and Craig, instructing OneStep and Craig against future violations of federal securities laws. The judge also ordered Craig to pay a civil penalty of $390,094, while OneStep and Craig were ordered to pay a total of $545,991 in disgorgement plus $85,184 in prejudgment interest, jointly and severally.