SAN FRANCISCO (CN) - The Justice Department has charged a Bay Area investment manager with conning investors out of millions by selling securities in the form of membership interests in investment funds.
Mark Feathers, CEO of Small Business Capital Corp., was charged Oct. 29 with 17 counts of securities fraud and 12 counts of mail fraud, according to unsealed court documents released by the U.S. Attorney's Office.
Feathers, 51, allegedly raised more than $50 million from over 250 investors starting in 2009, and promised prospective investors that the funds would pay "member returns" of at least 7.5 percent, prosecutors say.
By 2012, the Los Altos man had allegedly funneled more than $5 million in unsecured loans to his management company and had about $2 million for his own use. He allegedly constructed a Ponzi scheme to pay investors by using money from new investors, prosecutors say.
Feathers was released on $250,000 bond after appearing in federal court in San Jose on Wednesday. He's due back in court on Nov. 19.
Small Business Capital Corp. has been in receivership since 2012, when the Securities and Exchange Commission closed it down and won a $7.78 million judgment against Feathers. Feathers has appealed that judgment.
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