SEC Accuses Marina del Rey Real Estate Investor of Fraud

The Securities and Exchange Commission on Thursday accused Marina del Rey real estate investor Stephen J. Murphy and his company, American Capital Investments, of investment fraud, and obtained a federal court order freezing their assets and temporarily barring them from selling additional securities to investors.

The SEC complaint alleges that Murphy--who gained notoriety through advertisements in major newspapers touting his investment prowess--and other defendants raised about $13.7 million from approximately 180 investors nationwide in the past year through the sale of unregistered securities in the form of interests in 11 commercial real estate properties, some of which were in Orange and San Diego counties.

The SEC also said that Murphy and the others perpetuated a “Ponzi-like scheme” to pay off some investors and that they made numerous misrepresentations to the investors, including statements that their properties were generating annual returns of 25% to 135%, when in fact each of the properties involved in the investment were unprofitable.

Calls to Murphy were referred to his public relations firm, which released a statement saying that American Capital Investments “believes that the SEC lacks a fundamental understanding of its investment goals and strategy.”

“ACI is prepared to demonstrate that all of its investors have received everything they were told they would receive in exchange for their investments,” the statement said. “ACI, Stephen Murphy and the other defendants intend to vigorously defend themselves against the SEC’s action . . . and fully expect to be vindicated.”

Murphy attracted national attention early this year with full-page advertisements in the Los Angeles Times, New York Times, Wall Street Journal, Business Week and other publications.

His ads promoted himself and his investment advice books such as “One Up on Trump” and “Trickle-Up Economics.” Murphy also appeared on some television talk shows.