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Wednesday, June 19, 2024 | Back issues
Courthouse News Service Courthouse News Service

Brothers Accused of $2.7M Real Estate Scam

(CN) - Two brothers swindled scores of victims out of $2.7 million through real estate investments that were nothing more than a Ponzi scheme, the U.S. Securities and Exchange Commission claims in court.

In a complaint filed in the Trenton, N.J. Federal Court, the SEC says Daniel Rivera, of Staten Island, N.Y., and his brother, Matthew Rivera, of upscale Saylorsville, Pa., founded an enterprise known as Robbins Lane Properties and began soliciting unsophisticated investors with promises of profits to be wrought from redeveloping and selling properties.

"In reality, Robbins Lane did not have any employees and had no operations," the government's complaint says.

"Instead of investing in real estate, hundreds of thousands of dollars of investor funds were misused to pay other investors," the SEC claims. "The remainder of the funds was misappropriated to enrich Daniel Rivera, Matthew Rivera, and other family members and associates."

According to the agency, "investor funds were used to purchase tickets for sporting events, to pay for college tuition and sorority dues for Daniel Rivera's daughter, to pay personal credit card bills, for transfers to two entities that Daniel Rivera controlled, Relief Defendants Rivera & Associates and Daniel Rivera Inc., and for transfers to a janitorial business in which Matthew Rivera was a partner."

The SEC says Daniel Rivera sought out investors by placing advertisements on the company website and in local newspapers.

He also hosted special events and networked with associations, broker-dealer firms and insurance businesses, and gained referrals from his acquaintances, the government claims.

"Daniel Rivera preyed on a number of elderly, unsophisticated investors, at times recommending that they liquidate other holdings, including retirement assets, to invest in Robbins Lane. Investor funds were deposited into Robbins Lane bank accounts, which Matthew Rivera opened and controlled," the complaint says.

One investor allegedly told SEC investigator that Daniel Rivera told her to invest $300,000 by taking out a mortgage on her home.

Another investor was given an "Investment Contract" which promised a minimum six percent annual return on a $165,000 investment, the complaint says.

Several investors were given "promissory note" documents that stated a predetermined amount of principal would be paid by a certain date, which was often several years after the initial investment had been made, the agency says.

The government also asserts that in addition to lining their own pockets and to keep the scheme alive, the Rivera brothers used funds contributed by new investors to pay older ones.

Daniel Rivera is also accused of transferring nearly $800,000 from Robins Lane to companies he controlled.

The SEC says that beginning in 2008 and continuing until 2014, the brothers filed false tax returns to hide the misused investment funds.

The government is asking the court to permanently enjoin the brothers from violating securities laws, to order the brothers to disgorge the ill-gotten gains, and to impose civil penalties.

The SEC is represented by Alfred Day of the agency's Division of Enforcement in Washington, D.C.

The brothers and their businesses are represented by William Fleming of Gage Spencer &Fleming LLP of New York, NY.

Representatives of the party's could not be reached for comment on Friday.

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