The Security and Exchange Commission and the Department of Justice charged Robert Morgan for purportedly operating a Ponzi scheme that shuffled money from investors and faking loan documents.
Morgan is estimated to have 140 properties across 14 states. On Wednesday, he was charged for criminal activities by the DOJ for bank fraud, insurance fraud, and wire fraud, and the SEC also charged him with civil fraud for misusing and siphoning investor finances.
These charges stem from a cross-agency investigation effort and were found in August when the fraud allegation that involved loans were looked into – with over $1.5 million in mortgage securities issued by Freddie Mac and Fannie Mae.
This resulted in the indictment of four suspects, including Morgan, who conspired over a period of 10 years to acquire money, credit, funds, securities, assets, and other properties fraudulently from Freddie Mac and Fannie Mae and several other financial institutions.
Loan docs were supposedly forged by Morgan and his acquaintances at these institutions to get larger loans than they might have received. On numerous properties, they even submitted fake construction invoices and contracts that exaggerated contractor payments and falsified real estate contracts for buying properties that exaggerated prices of sales.
The DOJ stated that two books were used by Morgan and his team; the first book had the right accounting, and the second was completely forged for lenders that required data for refinancing and servicing loans.
The SEC’s complaint adds more fuel to fire; stating that Morgan obtained over $110 million by promising an 11% return to investors and then diverted the funds to settle other investors in a Ponzi-like scheme.
The SEC stated that some investors are still owed $63 million, while the DOJ lenders are expecting to get over $25 million and insurers are out $30 million due to Morgan and his accomplices.