EquityBuild’s 120-property portfolio of apartment buildings is on the market as the company faces SEC charges it operated a Ponzi scheme to defraud investors.
The firm over the past few years acquired some 1,700 units in total, mostly on the South Side, according to Crain’s. But a judge appointed a receiver to oversee them after the U.S. Securities & Exchange Commission sued EquityBuild, accusing it of fraud.
SVN Chicago Commercial was hired to unload the buildings, and the first properties will hit the market in the next couple of months.
EquityBuild — structured as a Florida corporation — and its affiliates raised at least $135 million from more than 900 investors starting in 2010, according to the SEC lawsuit, pitching the South Side as an overlooked investment opportunity and promising double-digit returns.
But the firm and its affiliates sustained heavy losses and resorted to paying early investors with money from new investments, the suit alleges.
EquityBuild officials Jerome and Shaun Cohen agreed to have their assets frozen and to stop raising money, according to Crain’s.
The portfolio includes a 33-unit apartment building at 5001 South Drexel Boulevard in Kenwood that EquityBuild acquired for $3.2 million in November and two South Shore properties — a 40-unit building at 7549-7559 South Essex Avenue and a 31-unit building at 2909 East 78th Street — acquired in January for $3.2 million, according to Cook County property records. [Crain’s] — John O’Brien