Lexington KY lawyer guilty of fraud charges in real estate deals
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A Lexington lawyer faces jail time for defrauding his shoppers of $2 million by concealing data about authentic estate houses he was encouraging them to make investments in.
A U.S. District Courtroom jury on Friday unanimously located Douglas Hawkins, of Richmond, guilty of investor advisor fraud, securities fraud and two counts of wire fraud.
Hawkins was an attorney, investor advisor consultant and certified fiscal planner, and owned his individual organization, Rite Money Team, in accordance to courtroom files.
In May perhaps 2013, Hawkins started performing with two businesses in Oregon, Correct Wholesale Houses and Portland Funding, that offered investors the likelihood to invest in promissory notes secured by real estate deeds of believe in. A promissory note is a prepared promise by 1 celebration to make a payment of funds at a date in the potential.
Hawkins supplied the obtain of notes to purchasers as a way to diversify their financial commitment portfolios, and was paid a fee for the sale.
While the paperwork explained a note and home finance loan, according to court docket documents Hawkins led clients to believe they were being purchasing ownership interest in a piece of authentic estate. According to the U.S. Attorney’s Place of work, the attributes were being found in Jackson, Mississippi.
Several of the qualities customers ended up getting had been not in very good situation and necessary considerable repairs, regardless of Hawkins telling them or else, paperwork stated.
Hawkins also confident investors the house that secured their property finance loan was rented, when it was not, and continued to make phony strategies about the properties.
“Hawkins withheld critical details about the attributes when advising his clientele to invest, including that a lot of were uninhabitable, rent collection was burdensome, and that the qualities were normally subject to theft and vandalism,” the U.S. Attorney’s Office said. “He also unsuccessful to advise his consumers that their investment funds would be employed for applications other than their homes, which include shelling out other investors and purchasing a Harley Davidson for an employee.”
In late 2015, the Oregon-primarily based organizations began to default on curiosity payments to the note purchasers and went defunct in August 2016.
In 2016, Hawkins proven RPB Rentals MS, LLC for the reason of transferring possession of the Oregon companies’ houses and taking care of the notes.
“Hawkins applied RPB to purchase supplemental houses and borrowed funds from new traders and secured the notes with deeds of trust,” court paperwork state. “In essence, RPB ongoing the exact same unsuccessful enterprise model of (the Oregon corporations).
“The enterprise model fared a minor superior beneath RPB and earnings from the properties did not deal with interest on the notes. As a consequence, quite a few of the traders experienced significant losses of likely cash flow and principal.”
According to court docket documents, in most circumstances, Hawkins led his purchasers to imagine their revenue was designated for the purchase or renovation of a sure piece of serious estate, but the money was “commingled,” or mixed, with other investors’ money and “used each time Douglas Hawkins required it.”
In accordance to the U.S. Attorney’s Place of work, clients are alleged to have invested $2 million to Hawkins for the attributes.
He was indicted in October 2021.
“We are absolutely unhappy in the conviction, we experience that the jury deemed the proof and did not just take their conclusion frivolously, but we are undoubtedly dissatisfied,” Hawkins’ lawyer, Whitney True Lawson, told the Herald-Chief.
Hawkins’ sentencing is scheduled for April 23 in Lexington. He faces up to 65 many years in prison for the fees, prospective fines and a judgment of restitution.
