Real Estate Investment Owner Pleads Guilty

Stamford Conn.

According to the feds..."Preet Bharara, the United States Attorney for the Southern District of New York, announced that CARLTON P. CABOT, the former owner and chief executive officer of Cabot Investment Properties LLC (“CIP”), pled guilty yesterday to one count of securities fraud for participating in a scheme to defraud investors in numerous CIP-sponsored real estate investments.  As part of the fraud, CABOT and his co-defendant misappropriated over $17 million of investor funds to pay for personal and business expenses, and concealed the fraud from the investors with manipulated financial statements.  CABOT pled guilty before U.S. District Judge Jesse M. Furman.

U.S. Attorney Preet Bharara said:  “Yesterday, Carlton Cabot, CEO of Cabot Investment Properties LLC, admitted to taking over $17 million in investor funds and spending it on himself, including for private school tuition for his family and a luxury vacation apartment.  Cabot camouflaged his fraud by doctoring financial statements and lying to his investors.”

According to the allegations contained in the criminal complaint against CABOT, the indictment to which CABOT pled guilty, and statements made during CABOT’S plea proceeding:

From 2003 through 2012, CIP – which was controlled by CABOT – sponsored and oversaw approximately 18 so-called tenants-in-common (“TIC”) securities offerings to investors located all over the United States (collectively, the “TIC Investments” and the “TIC Investors”). A TIC investment is a real estate investment in which investors collectively own a piece of commercial real estate and are entitled to receive a portion of the rental income from the property.

From 2008 through 2012, CABOT engaged in a scheme to defraud the TIC Investors by misappropriating funds belonging to the TIC Investments and concealing his misappropriations by knowingly providing false and misleading financial reports and other information to the TIC Investors.

According to the representations in the offering prospectuses for the TIC Investments, CIP was only allowed to collect “excess” rental income from the TIC Investments – i.e., any additional money left over after the TIC Investments had paid the operating expenses for the properties and the disbursements due to the TIC Investors.  Despite these representations, CABOT repeatedly transferred money out of bank accounts belonging to the TIC Investments and into CIP bank accounts that he controlled (the “CIP Operating Accounts”) before these funds could be used to pay for operating expenses and disbursements to the TIC Investors. 

CABOT then used these funds to pay for unauthorized purposes without the knowledge or authorization of the TIC Investors, including: (1) to cover the operating expenses and investor distributions of other TIC Investments that had no available funds; (2) to pay for millions of dollars of personal expenses, including expensive cars, rental apartments, and private school tuition; and (3) to pay for CIP business expenses, including an approximately $1,125,651 civil settlement to certain TIC Investors who had sued CABOT and others."

If he ends up in federal prison and most likely he will based on the amount of the fraud, this is what Mr. Cabot can expect based on my experience...https://www.amazon.com/gp/product/B011GTWLOG