Harbor City Capital Corp. and founder Jonathan P. Maroney raised more than $17.1 million through a series of fraudulent, unregistered securities offerings, the SEC says in filings in a federal court in Florida.
Maroney and his company misappropriated about $4.48 million, distributed at least $6.5 million to earlier investors, and at most used just $449,000 for Harbor City business expenses, according to a Securities and Exchange Commission complaint filed in the U.S. District Court for the Middle District of Florida.
Harbor City and Maroney solicited investors for Harbor City Ventures LLC and five special purpose entities, also named as defendants in the SEC suit. They used Harbor City’s website and marketing videos posted to YouTube to find potential investors for their purported lead generation sales businesses, the complaint says.
Maroney allegedly used investor funds to pay off about $1.35 million in credit card bills. He also spent $827,000 toward a waterfront home, $90,000 on a Mercedes Benz, and $808,000 for other housing and renovation expenses, the SEC says in the suit, unsealed Monday.
The agency secured a temporary restraining order and asset freeze April 21. An evidentiary hearing is scheduled for April 29.
Causes of Action: Securities Act §5(a)—Unregistered sale of securities (15 U.S.C. §77e(a)); Securities Act §5(c)—Unregistered offering of securities (15 U.S.C. §77e(c)); Securities Act §17(a)—Employing a device, scheme, or artifice to defraud, making untrue statements or omitting material facts, or engaging in a transaction, practice, or course of business which operates as a fraud in an interstate offering or sale of securities (15 U.S.C. §77q(a)); Exchange Act §10(b)—Using a manipulative or deceptive device or contrivance for a securities transaction in violation of SEC rules (15 U.S.C. §78j); SEC Rule 10b-5—Employing a device, scheme, or artifice to defraud, making untrue statements or omitting facts, or engaging in any act, practice, or course of business which operates as a fraud or deceit (17 C.F.R. §240.10b-5).
Relief: Permanent injunction prohibiting defendants from violating certain federal securities laws; disgorgement with interest; civil fines.
Response: Attorneys for the defendants weren’t listed on the docket and couldn’t be identified for comment. Harbor City didn’t immediately respond to a comment request sent through its website Tuesday.
The case is SEC v. Harbor City Capital Corp., M.D. Fla., No. 6:21-cv-00694, case unsealed 4/26/21.
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