(HedgeCo.Net) Russell Craig and his company, OneStep Financial Services, LLC has been charged with violating the anti-fraud provisions of the federal securities laws by promising investors profits in return for depositing funds into escrow for the purchase or development of real estate properties, and then misappropriating investor funds.
The SEC’s complaint, filed in the U.S. District Court for the Northern District of Georgia, alleges that in one of the schemes, Craig defrauded an investor of more than $900,000 between 2014 and 2016 and misappropriated over $600,000. Craig misrepresented that the investor’s funds would remain in escrow and be used only for the purpose of obtaining a “proof of funds” to purchase a condominium property known as the Heritage Condominiums in Atlanta, Georgia. Craig also misrepresented that, after the property was purchased, the investor would receive a return of the principal plus a profit of approximately 30% in a short period of time. Despite these promises, Craig almost immediately transferred these funds to bank accounts that he controlled or to third parties. The SEC’s complaint also alleges that Craig encouraged the investor to take out loans to further fund the investment, misrepresenting that Craig would make payments on the loans with his own funds until the real estate transaction closed. Instead, Craig allegedly used the investor’s escrowed funds to make the payments.
The SEC further alleges that Craig and OneStep engaged in a similar scheme in late 2017. In this scheme, Craig and OneStep defrauded at least five investors, who were told that their funds were being used for a real estate development project, of $460,000 by guaranteeing high profits and then misappropriating the funds for other purposes.
The SEC’s complaint charges Craig and OneStep with violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The SEC’s complaint seeks a judgment against the defendants providing for permanent injunctions, disgorgement with prejudgment interest, and civil penalties. The complaint also names Peter Baker, Elizabeth Oharriz, Prestige Global Trading, Ltd., and Diversified Initiatives Consulting & Logistics, Inc. as relief defendants, seeking disgorgement with prejudgment interest against them.