The Securities and Exchange Commission froze the assets of a San Diego-based firm and its owner, accusing them of running a real estate investment fraud that raised about $50 million from hundreds of investors nationwide.
The SEC alleges that Western Financial Planning Corp. and Louis Schooler, of San Diego who owns and controls Western, sold vacant land in Nevada held by partnerships they organized in order to sell for profit at a later date.
Schooler and Western failed to tell investors they were paying an exorbitant mark-up on the land, in some cases more than five times its fair market value, the SEC claims, adding they also failed to reveal the land held by the partnerships was often encumbered by mortgages that Western used to help finance the initial purchase of the land.
“Schooler conned hundreds of people into investing with Western by leading them to believe that they were getting a good value for plots of vacant land,” said Michele Wein Layne, director of the SEC’s Los Angeles regional office. “What he didn’t tell them was that the land was worth only a small fraction of their investment and that he was profiting at their expense.”
Schooler did not immediately respond to HousingWire's request for comment.
The SEC’s complaint filed in federal court in San Diego alleges that Western and Schooler misled investors since 2007 by providing them with comparative prices of supposedly similar plots of land that had sold for prices higher than those offered by Western.
Regulators say that, in reality, the prices that they provided were not comparable to the land sold by Western. The SEC also alleges that since the spring of 2011, Schooler paid “hush money” to silence investors who discovered they had been defrauded, allowing the scheme to continue.