SEC charges South Floridians in alleged $9M real estate scam
Judge issued orders for “disgorgement of ill-gotten gains” in a yet-to-be determined amount
A Coral Springs man was charged in an alleged multifamily investment sham enterprise that siphoned and misused $2.4 million, with nearly half diverted into his personal account.
A lawsuit filed by the Securities and Exchange Commission claims Larry Brodman and his Property Income Investors sold fraudulently unregistered security offerings, raising $9.1 million for real estate investments from 156 investors in 26 states. The alleged sham lasted from at least January 2016 to last September.
The June 7 complaint also charged Anthony Nicolosi, a top-producing sales agent at Property Income Investors, who along with others received commissions, even though they were neither registered sales agents nor affiliated at the time with registered broker-dealers. Documents provided to real estate investors vowed that commissions would be paid to licensed brokers.
In signed consents, Brodman and Nicolosi, of Lake Worth Beach, neither admitted nor denied the allegations but agreed to a future court order for the “disgorgement of ill-gotten gains” and a civil penalty. Their signed consents resolve the claims in the SEC’s civil suit but do not give the duo immunity from any criminal claims that could arise in the future, according to the documents.
Their attorneys did not immediately return requests for comment.
Federal Judge Raag Singhal in Fort Lauderdale ordered on Monday for Brodman and Nicolosi to pay an amount that is yet to be determined. Singhal also issued permanent injunctions against the duo, precluding them from violations of Securities Act provisions.
According to the SEC, Brodman founded Property Income Investors in 2016. It was marketed as a firm to buy, renovate, lease out and sell apartment buildings. Documents provided to investors said Brodman would receive 30 percent from rent profits, with the rest going to investors, and that he would split property sale proceeds with investors.
That would have entitled him to $312,000 at the most, but Brodman skimmed $1.12 million and put it into his personal accounts, according to the SEC’s complaint. Another $1.2 million was used to pay commissions to unregistered sales agents, including Nicolosi, the suit alleges.
This is not the first time that Nicolosi, who legally changed his last name from Anthony Peluso, is accused of selling unregistered securities. In December 2020, the Alabama Securities Commission issued him a cease and desist order, according to the SEC. In June 2001, the National Association of Securities Dealers permanently banned him from associating with any of its members “for engaging in high-pressure sales tactics and making misrepresentations to customers,” the SEC added in its complaint.
In the latest alleged scheme, properties were purchased through 11 limited liability companies. Records show that one of the entities bought an eight-unit apartment property at 3050 Coral Spring Drive in Coral Springs for $1.25 million in 2019; and another purchased a five-unit property at 1361 Southeast Fourth Street in Deerfield Beach for $635,000 in 2017.
Property Income Investors and the 11 entities signed consents, agreeing for the court to appoint a receiver over them, records show.
This is yet another case that shines a spotlight on South Floridians and real estate tied to questionable investments. Others involve criminal charges.
Palm Beach County resident Dusko Bruer was sentenced in May to 24 months in prison for evading taxes and hiding funds offshore, and using some of the money in foreign bank accounts to buy a Lake Worth Beach mansion for his ex-girlfriend.
Also, Weston resident William Kelly recently pleaded guilty for his role in an EB-5 investment visa fraud case involving a Jay Peak biomedical research project in Vermont.