6.17.2009 The SEC filed a complaint in the U.S. District Court for the Central District of California against Horizon Property Holdings, L.C. (Horizon) and its principal, Cydney Sanchez. The SEC alleges that Sanchez, of Los Angeles, and Beverly Hills-based Horizon operated a $6 million real estate investment scheme that primarily targeted the African-American and Hispanic communities.
The SEC’s complaint alleges that in 2006 and 2007 Sanchez and Horizon recruited approximately 150 investors in California and several other states to participate in a purported foreclosure reinstatement program. According to the SEC, Sanchez claimed that investor funds were secured by a promissory note and an interest in real property and would be used to cure defaults on distressed properties. By promising returns of 40% in as little as 30 days, Sanchez raised approximately $6 million.
As the SEC alleges, however, investor money was not secured and was not used to rescue homeowners from foreclosure. The SEC alleges that Sanchez and Horizon were instead operating a Ponzi scheme that used approximately $3.7 million from new investors to pay principal and returns due to earlier investors. The complaint further alleges that Sanchez also misappropriated the remaining investor funds to finance unrelated and undisclosed real estate-related activities and pay her personal expenses (including more than $500,000 for, among other things, airline tickets, clothing, jewelry, handbags, electronic equipment, furniture and cars).
Click http://www.sec.gov/litigation/litreleases/2009/lr21088.htm to access the SEC litigation release.