Fraud allegations against two Houston investors resulted in a settlement with the Securities and Exchange Commission (SEC).
David Isaac Lapin, 44, and Jeffrey Carl Wigginton, 49, both of Houston, were alleged to have misled investors that they persuaded to fund commercial loans.
Specifically, the two were alleged to have “knowingly or recklessly misled investors” about risks related to the commercial loans, including delinquencies, defaults and foreclosures on mortgage loans in which some of the limited partnerships had invested. Also, they allegedly misled investors about their “inferior lein positions” and the whopping 25 percent origination fees that the borrowers were incurring, the SEC said.
Between October 1998 and September 2001, the pair raised over $140 million with their Lapin & Wigginton Asset Management, LLC, company, according to the SEC. The business’s parent company, Premiere Holdings of Texas, LP, filed for bankruptcy in late 2001, the SEC said.
The charges, which included fraud and securities registration violations, were settled by the two, who, while not pleading guilty, agreed to disgorgement, prejudgment interest, civil money penalties, and to refrain from association with a broker-dealer or investment adviser.
Lapin will pay disgorgement of more than $3 million for illicit profits, $282,075 in prejudgement interest and a $120,000 penalty. Wigginton will pay disgorgement of $647,198, $56,415 in prejudgement interest and $120,000 in civil money penalty, the SEC said. Though both have filed for bankruptcy, they have agreed to pay these amounts, which, the SEC said, would be returned as wholly as possible to the scheme’s victims.
