Irvine-based Real Estate Partners Inc., an investment and management company, has filed for bankruptcy after charges of securities fraud were leveled against the company and its executives.
Real Estate Partners and seven affiliates have filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Central District of California, according to CoStar Group Inc.
Last month, the company and its president, Dawson Davenport, were among several parties the Securities and Exchange Commission charged with conducting a $50 million real estate fraud scheme.
The SEC says that Real Estate Partners ran a Ponzi-like scheme, where investors were promised huge returns for their investments, which instead were largely used to pay commissions and other investors.
The SEC claims the company failed to disclose that more than half the $50 million it raised from more than 1,600 investors from 2003 to 2006 went to commissions. The suit also charges other local individuals with running boiler-room operations.
Real Estate Partners invests in apartments both locally and out of state. Its biggest buy in the area was San Clemente’s Seacrest Apartment Homes, which it paid nearly $88 million for last year.
