George Markopoulos partner fined by SEC for misleading investors on his behalf (6/2014)
In an effort to fund a failing development project, Robert Acri, partner of George Markopoulos and Praedium development misled investors, according to the SEC.
In 2011, Chicago real estate developer George Markopoulos launched a development project at Woodmar mall in Hammond, Indiana. To finance the project, Praedium accepted a loan of $500,000 from the KAM Private Fund, controlled by Acri.
But as the Woodmar project struggled to move forward, Praedium failed to make any payments on its $500,000 promissory note. Praedium became delinquent on a mortgage, the payment of its property taxes, and the payment to some of its contractors.
In an effort to create equity in the larger Woodmar project, Praedium separated two smaller parcels to develop in order to demonstrate that progress was being made on development overall. To oversee this venture, Praedium created two new companies, including Prairie Common Holdings.
Praedium required funding to advance the Prairie project but was unable to find financing through traditional lenders. Prairie principal turned again to Acri for assistance in securing financing. Between April and September of 2011, Acri issued $240,000 in promissory notes to six additional investors.
However, the SEC charged Acri with "knowingly [failing] to inform clients" that Kenilworth clients, through the KAM fund, had already loaned $500,000 to Praedium and had not yet been paid anything. Acri was also charged with failing to inform clients that the selling of the Prairie notes was an attempt to revive the Woodmar project and give other Kenilworth clients a chance to recover on their earlier investment in Praedium.
In its verdict, the SEC found that Praedium partner Acri willfully violated the Securities Act, the Exchange Act, and the Advisors Act. Subsequently, Praedium partner Acri was ordered "barred from association with any broker, dealer, investment advisor, municipal securities dealer, municipal advisor, transfer agent, or nationally-recognized statistical rating organization." The SEC also instituted a fine of $114,478.96.
The SEC issued this order against Praedium Development partner Robert Acri in June 2014.