The Securities and Exchange Commission (SEC) has filed charges against alternative investment firm owner Brent Borland for allegedly embezzling nearly $6 million in investor funds “to fund his family’s lavish lifestyle.”
According to the SEC’s complaint, which was filed in US District Court Southern District of New York, Borland sold at least $21.9 million of promissory notes to at least 44 investors between 2014 and 2017, which he said would be used as bridge financing to fund the construction and development of an international airport in Belize.
Borland marketed and sold the notes through two companies, Borland Capital Group LLC, which purports to be active in “alternative investment,” and Belize Infrastructure Fund I, LLC, which claims to be in the business of construction finance.
However, the SEC says Borland funneled investor funds to himself and his family using the account of Canyon Acquisitions, a holding company owned by Borland and his wife, Alana LaTorra Borland.
Borland used the investor funds to pay his family’s expenses, which included mortgage and property tax payments on a multi-million dollar Florida mansion, multiple luxury automobiles, tuition for an elite private school for the Borlands’ children; $36,000 for membership at a posh beach club in Delray Beach, Florida, nearly $10,000 for high-end watches, and almost $2.7 million to pay off Alana’s credit cards. The complaint also named Mrs. Borland and Canyon Acquisitions, LLC as relief defendants.
“Investors should be able to count on the fact that their invested funds are used as promised,” Robert Burson, associate regional director of the SEC’s Chicago regional office, said in a release. “We obtained an asset freeze and immediate injunctive relief in this case to protect victims from alleged false promises.”
The SEC’s complaint charges Borland, Borland Capital Group, and Belize Infrastructure Fund with violating the antifraud provisions of federal securities laws. The SEC is seeking asset freezes, an accounting of investor assets, disgorgement, and civil penalties. It is also looking to recover investor proceeds that Borland transferred to the relief defendants.
The US Attorney’s Office for the Southern District of New York also announced criminal charges against Borland, who was arrested May 16.
“While Borland and his family enjoyed the benefits of at least $5.98 million in purloined investor cash, note investors were not so lucky,” said the SEC in its complaint. “The maturity dates on almost all, if not all, of the notes have passed without repayment and all of the notes have slipped into default.”
The SEC said the overwhelming majority of note investors still have not been paid what they are owed, including interest payments and return of principal. The SEC accused the Borlands of misleading investors to believe that their notes were secured by valuable real estate that was worth at least twice as much as the amount of the note.
“In the course of the fraud, Defendants repeatedly lied to—and hid material information from—investors,” said the SEC. “To make matters worse, defendants perpetuated their fraudulent scheme by secretly re-pledging the same collateral to multiple investors.”
The complaint said Borland’s family, including his wife and mother-in-law, benefited from the fraud, and that the money Borland took from investors to fund his family’s lifestyle was only a fraction of the more than $14.4 million of investor funds that Borland funneled through Canyon Acquisitions.