The Securities and Exchange Commission (SEC) has obtained final judgment concluding the fraud case against real estate crowdfunding platform iFunding and defendant William C. Skelley.
iFunding was an early entrant in the real estate crowdfunding market that issued securities under Reg D 506c, a new exemption created by the JOBS Act of 2012, that allowed for general solicitation.
The complaint against iFunding was originally filed in 2018. At that time, the SEC alleged that Skelley, a co-founder and the CEO of Innovational Funding LLC, misappropriated more than $1 million of investor funds for his personal use. The SEC’s complaint also alleged that Skelley made materially false or misleading statements to investors orally and in private placement memoranda about the use of investor funds, the amount of funds that had been raised on iFunding’s portal, and the number of real estate projects that iFunding had financed.
According to the SEC, on March 26, 2021, the U.S. District Court for the Southern District of New York entered a final judgment against former New York resident Skelley, the co-founder of a real estate crowdfunding portal.
The SEC obtained a default judgment on July 8, 2019, after Skelley failed to respond to the SEC’s complaint. The judgment permanently enjoined Skelley from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
In its March 26, 2021 final judgment, the court ordered Skelley to pay disgorgement of $1,073,746.65, plus prejudgment interest of $ 184,655.27, and a civil penalty of $1,073,746.65.