SEC charges Redding mortgage company with fraud
Securities and Exchange Commission
REDDING, Calif. — The Securities and Exchange Commission announced Thursday that they have settled charges against operators of a Redding real estate investment business who allegedly engaged in a years-long scheme to bilk hundreds of investors out of millions of dollars.
The SEC alleged that from 2012-2016, Tobias Preston, his brother, Charles Preston, and his son, Caleb Preston, along with their investment advisory entity, McKinley Mortgage Co. LLC, raised more than $66 million from approximately 300 investors. Officials reported that most of the victims were retail investors.
The SEC explained that the suspects falsely stated that investments in their fund, Alaska Financial Company III, LLC were secure and that it earned high returns from its portfolio. Instead, the fund was insolvent and unable to generate sufficient revenue to meet its interest obligations for years.
According to the SEC, Tobias Preston misused more than $17 million to fund personal businesses and to pay for personal expenses, and McKinley misused an additional $14 million to pay for its own operational expenses.
The SEC also alleges that Charles Preston, Caleb Preston, and Accounting Manager Laura Sanford helped hide the fraud by preparing or distributing investor materials with false information.
According to SEC officials, in settling, the Prestons and McKinley agreed to repay the almost $30 million they improperly received that has not already been returned to the fund and to the appointment of new management at McKinley, AFC III, and their affiliates.
Tobias Preston also will be ordered to return assets he improperly acquired and to pay a $2.5 million penalty. Charles Preston and Caleb Preston agreed to pay penalties of $425,000 and $150,000, respectively. The settlements are subject to court approval.
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