Stamford Real Estate Investor Pleads Guilty to $17 Million Fraud

The former owner of Cabot Investment Properties LLC, Carlton Cabot, is under fire for his role in a $17 million fraud. This is far from the first time a leading investor pleads guilty to a real estate fraud scheme.

In the multi-year scheme, Cabot took investor funds for his own personal use. The money was spent on expensive private school tuition and a luxury vacation apartment, among other lavish lifestyle expenses.

Cabot covered up the fraud with forged financial statements, created to indicate positive investment performance where the funds had already been funneled into Cabot’s personal accounts.

Over about a decade in the business, Cabot helped investors put together tenants-in common (TIC) investment deals. This type of commercial real estate transaction makes a handful of investors fractional owners in a commonly held property, and each owner is paid a portion of the rent generated by the property.

Cabot used the funds as he best saw fit, including padding his own bank account, while reporting to investors that everything was going forward as planned.

As part of the TIC deals, Cabot’s firm was allowed to collect excess rents after paying investors as a fee. However, Cabot took funds due to investors and put them right into the firm’s accounts without passing on the portion due to investors.

Working with Chief Operating Officer Timothy J. Kroll, Cabot published false reports to investors covering up the growing sums owed. The operation came to a head in 2012 when Cabot’s $17 million in stolen funds became too large to conceal or carry forward.

The investor pled guilty in October, 2015 and will be sentenced in July, 2016 for his crimes. Each count of securities fraud carries a 20 year maximum sentence. With all that has occurred, Cabot could spend the rest of his life in prison for his role in this massive real estate fraud.

Read the whole story at Westfair.

If you are looking to invest in real estate, you can take out the middleman and invest yourself. A certified Real Estate Investment Advisor (REIA) is an agent who specializes in helping investors like you find the perfect property.

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