Larry Brodman Facing Fraud Charges For Reportedly Cheating Investors
According to the investigators, Larry Brodman misappropriated more than $1 million in investor funds for personal use.
The SEC also said it caught Brodman using money from newer
investors to pay a portion of the supposed profits of earlier investors.
The Miami Herald reports on the complaint, which also
involves another Florida man accused of acting illegally as an unregistered broker
while offering and selling the securities involved.
Anthony Nicolosi was charged with violating the offering
registration and broker-dealer registration provisions of the federal
securities laws.
The complaint said Brodman and his companies told investors
their money would be used to buy turnkey, multifamily properties in South
Florida, which would then be renovated and rented out. From January 2016 to
September 2020, Brodman and his companies raised more than $9 million from
about 156 investors from 26 states through a series of unregistered securities
offerings.
The investigation revealed Brodman and his companies told
investors that commissions would only be paid to licensed brokers and dealers,
but paid sales commissions exceeding the agreement and totaling about $1.2
million to unregistered sales agents, including Nicolosi.
Meanwhile, Brodman was only entitled to receive at most about
$312,000, but the SEC said he misappropriated $1.12 million, diverting money
into his personal account.
The SEC said it found that at least $124,000 returned to
some investors as “profits” were actually payments by later investors. Also, a
significant portion of $460,000 raised from two 2020 investors was immediately
distributed to earlier investors, the complaint said.
Both men have agreed to pay a settlement to be determined by
the court at a later date.
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