Investor Lawyers Blog
As recently reported, on August 15, 2018, the SEC initiated formal charges against Defendants Jerome Cohen, Shaun Cohen, and their companies — Equitybuild, Inc. (“Equitybuild”) and Equitybuild Finance, LLC (“Equitybuild Finance”) — in connection with the SEC’s efforts to halt a purported Ponzi scheme. As alleged in the SEC’s Complaint, “Since at least 2010, Defendants … have raised $135 million from more than 900 investors. Defendants raised these funds by falsely promising investors safe investments, secured by income-producing real estate, that generated returns of 12% to 20%.”
According to the SEC, investors were allegedly defrauded in several ways. For example, the Defendants’ purportedly failed to disclose sizable up-front fees of 15-30% taken off the top of investor equity. In addition, the Defendants allegedly misrepresented the returns earned on various real estate deals, touting their “impressive returns” when, in actuality according to the SEC, investors sustained heavy losses on investments in predominantly South Side Chicago real estate deals. The SEC has further alleged that rather than inform investors of financial distress, father and son Defendants Jerome and Shaun Cohen, respectively, elected instead to continue “[t]o solicit investors with offers of safe investments and outsized returns.”
Equitybuild is structured as a Florida corporation. Since at least 2010, the company has solicited investments, promising returns that were to be generated through the purchase, renovation and development of Chicago real estate. Equitybuild Finance, f/k/a Hard Money Company, LLC, is structured as a Delaware limited liability company. Both companies were founded by Defendant Jerome Cohen, 63 years of age, and currently a resident of Naples, Florida. Defendant Shaun Cohen is a resident of New York, New York, and serves as the President and sole officer of Equitybuild Finance.
