Newport man agrees to pay $3.3 million to settle SEC fraud complaint
A Newport Beach resident has agreed to a $3.3-million payment to settle a U.S. Securities and Exchange Commission complaint accusing him of defrauding investors and misappropriating more than $1.3 million from a real estate investment fund he controlled.
According to the SEC complaint filed Feb. 1, Paul A. Garcia, 53, of Irvine-based Caliber Partnership I LLC raised $675,000 from 12 investors in 2014 and 2015 while saying their money would go toward buying an unfinished golf resort in Colorado.
The complaint alleged that Garcia falsely claimed the resort already had $2.7 million committed from Caliber and that once the purchase was completed, Caliber would join a planned real estate investment trust that was ready to begin public trading of its securities.
However, as the money came in, Garcia used it and other borrowed funds to finance two real estate purchases, according to the complaint. In all, the SEC alleged, he misappropriated more than $1.3 million through other Irvine-based companies he controlled.
One of the victims was an 82-year-old who lost $250,000, according to the complaint.
Richard T. Woods of Southlake, Texas, also was named in the complaint.
Woods “misrepresented Caliber’s prospects in marketing materials that he authored and Garcia approved and used to attract investors,” SEC officials said in a news release.
To settle the complaint, Garcia and his companies agreed to pay more than $3.3 million in penalties and to disgorge “ill-gotten gains,” plus interest, the SEC said.
Garcia also agreed to a court order prohibiting him from participating in securities offerings and from serving as an officer or a director of a public company, according to a news release.
Woods agreed to a penalty and disgorgement totaling about $30,000, according to the release.
“All settling parties agreed to the sanctions without admitting or denying the allegations in the complaint,” SEC officials said.
Twitter: @BradleyZint
