According to the U.S. Securities and Exchange Commission, Lawrence “Lee” Loomis and his father-in-law John Hagener defrauded 100 investors out of $10 million by soliciting investments in supposed loans to homebuyers to be secured by real estate deeds of trust. According to the SEC, the defendants told prospective investors that the investments would be put into safe “liquid high-yield accounts” earning 12 percent and that the investments were guaranteed by a third party.
The SEC’s complaint alleges that Loomis and Hagener instead used the money primarily to prop up Loomis’ other failing businesses. The SEC further alleges that Loomis paid himself hundreds of thousands of dollars from companies that received investor money and Hagener received more than $190,000 for managing the funds even though he was misappropriating investors’ money to fund other businesses.
The SEC also alleges that the loans were not secured by real estate deeds of trust as Loomis had claimed. Hagener allegedly facilitated the scheme by transferring investors’ money to accounts that he knew were being used to fund the other businesses. Hagener also allegedly sent investors fake account statements falsely stating that their investments had earned 12 percent returns.
Notice two things about this case. First, notice that the investments were supposedly guaranteed by a third party. Such claims are common, but Investor’s Watchdog has often found that the supposed guarantors do not have the financial wherewithal to make good on the guarantees.
Finally, notice that Loomis has other businesses. Although owning more than one business is not always an indicator of fraud, it is something that Investor’s Watchdog always investigates further. If one business struggles, the temptation is great to “borrow” from the other business.
If you need your nest egg, protect it by hiring an investor protection company to do a pre-investment investigation.
