The Securities and Exchange Commission is charging Attorney Robert C. Acri with Illinois securities fraud related to a real estate venture. Acri is the founder of Kenilworth Asset Management, LLC, a Chicago-based investment advisory firm. He has agreed to settle by disgorging the funds that were misappropriated from investors, as well as commissions, interest, and a penalty. Monetary sanctions total about $115,000.
The SEC brought the real estate investment fraud charges after detecting possible misconduct when it examined the firm. The regulator’s Enforcement Division was alerted and a probe followed.
According to the findings of the investigation, Acri misled investors over promissory notes that were issued to supposedly redevelop an Indiana shopping center, misappropriated $41,250 for other purposes, and failed to tell investors that the firm received a 5% on every note sale. This amount would total $13,750. He also purportedly did not let investors know a number of material facts, including that the reason there even was an investment offer is that he was trying to rescue funds that other clients had invested earlier in the same real estate developer.
The developer, Praedium Development Corporation, had set up Prairie Common Holdings LLC to issue the promissory notes. One of Praedium’s main reasons for selling the notes to Kenilworth clients was to repay those earlier investors. (It had defaulted earlier on a half-million dollar loan.)
Meantime, these clients were not told that the loan default or the developer and an affiliate had been delinquent to pay property taxes, its mortgages, and certain invoices. They didn’t even know that Praedium was involved in the project or that one of its owners was a friend of Acri’s and in financial trouble. Acri used the $41,250 of client money to pay back other clients and make other payments he owed, including a settlement on a lawsuit.
He resigned from the investment advisory firm in 2012. As part of the settlement with SEC, Acri has agreed to cease and desist from violating federal securities laws’ anti fraud provisions and is barred from the industry. He has consented to not take part in penny stock offerings or appear before the Commission as a lawyer or for any entity that the agency regulates.
Chicago-Area Attorney Charged After SEC Exam Spots Fraud in Real Estate Investment Offering, SEC.gov, June 11, 2014
Read the SEC Order (PDF)
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