PHOENIX (CN) – Four people who ran Radical Bunny LLC – including two CPAs, a pharmacist and a grade school principal – took $197 million from investors in a mortgage-lending fraud, the SEC says in Federal Court. It says the four operators rewarded themselves with millions of dollars in “vendor fees.”
The SEC says the four turned over investors’ money to Mortgages Ltd., a now-bankrupt Phoenix-based originator of high-interest, short-term loans to real estate developers. Radical Bunny and its operators lied repeatedly to investors, the SEC said, and were “caught completely unaware” when Mortgages Ltd. tanked.
“These promoters promised investors more than they could possibly deliver,” said Rosalind Tyson, director of the SEC’s Los Angeles Regional Office. “Unbeknownst to investors, more and more of their money was being shifted into fewer and riskier loans.”
Tom Hirsch of Paradise Valley (CPA), Harish Shah of Phoenix (CPA), and Howard Walder (pharmacist) and Berta “Bunny” Walder (school principal), both of Phoenix, were charged with securities violations.
Hirsch took at least $3 million in “vendor fees,” the Walders took at least $2 million and Shah took $700,000 the SEC says. It says that Shah particularly targeted South Asians, and took about $40 million from 150 families.
The SEC demands disgorgement, fines and injunctions.