Entrepreneur Misused Loan in Effort to Avoid SEC Suit, Feds Say

Real estate entrepreneur Max McDermott is facing wire fraud and money laundering charges in connection with a $10 million loan prosecutors say he fraudulently obtained.

The indictment, filed in the US District Court for Southern District of New York, alleges McDermott told the lender he intended to use the money to grow his businesses but instead used the funds to repay investors in one of his companies—California-based real estate lending and investment firm Secured Income Group Inc.—after learning it was being investigated by the US Securities and Exchange Commission.

McDermott had hoped to dissuade the SEC from taking enforcement action ...