Wealth Building by Stealing From Your Investors

Jim Toner wants to help you get rich investing in real estate. He has a “simple 3 step method the ‘experts’ and ‘gurus’ don’t want you to know about creating lasting wealth with real estate…” According to an SEC complaint those steps are lying to investors, taking undisclosed fees, and pocketing some of the capital.

Mr. Toner consent to the court order, but did not admit or deny the allegations. We will have to rely on the SEC complaint and assume that the facts are mostly correct.

Mr. Toner’s main business is selling his instructions on how invest in real estate. On the side, he also solicits investments. Some of those investments in Arizona went bad and resulted in these SEC charges.

Mr. Toner pitched the investments as pooled investments in residential properties. He would manage and oversee renovations and then quickly resell the properties for a profit. Some of the investments were notes and some were partnership interests. He pulled together almost $1 million for three properties in Arizona.

He claimed he was the manager and would be running the deals. But he turned over control to an unnamed real estate broker who had already purchased two of the properties and sold them to the investors for “handsome profits” according to the SEC.

Mr. Toner claimed that he would be investing his own assets in the investments. According to the SEC complaint he told different investors different statements about how much he would be investing. The SEC claims he had no intention to make the investment. It points out that Mr. Toner was in protracted bankruptcy and had no assets to invest.

Lastly, Mr. Toner took management fees. In the offering documents, Mr. Toner would only be paid management fees after the partners received profits from the investments. He took $31,000 up front from the proceeds and received another $21,000 before the investors had realized any returns.

Later, as the investments were going poorly, Mr. Toner solicited another investor. Instead of adding this Investor B to the investor roll, he pocketed her $20,000. Given that the SEC is focusing on elderly investors, the complaint points out that Investor B was elderly.

At the end, Mr. Toner had raised almost $1 million from investors and ended up selling the properties for $256,000. Mr. Toner pocketed almost $70,000 through unauthorized management fees and theft.

He also failed to determine that the investors were accredited or told them to lie about being accredited.

This seemed like good wealth building for him, but not for his investors.

In the end, it was bad deal for him. Mr. Toner has to come up with over $500,000 in disgorgement and penalties.

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