The U.S. Securities and Exchange Commission (SEC) today filed a complaint against an Orange County businessman and his Texas-based partner for allegedly devising a $675,000 fraud scheme involving the proposed purchase of an unfinished, $5 million Colorado golf course.
Caliber Capital Management LLC. owner Paul A. Garcia, a 53-year-old Newport Beach resident, and Richard T. Woods, a 53-year-old resident of Southlake, Texas, enticed investors by fraudulently claiming they'd heavily invested into the deal, according to Steven D. Buchholz, an SEC attorney in San Francisco.
"[Garcia] claimed that Caliber management had already committed $2.7 million toward the golf resort purchase and that once the purchase was completed, Caliber would join a planned Real Estate Investment Trust (REIT) that was poised to begin public trading of its securities," Buchholz wrote in his complaint filed inside the Ronald Reagan Federal Courthouse in Santa Ana. "In truth, no one had committed the $2.7 million as Garcia claimed."
The SEC is accusing Woods of writing statements "he knew or should have known were false and misleading" to investors: that the deal would also involve a vacation home development in New York's Catskill Mountains, a property on the InterCoastal Waterway on the Atlantic Coast, a Caribbean resort and a parcel of homes in Northern California.
Garcia also falsified financial documents and misappropriated more than $1.3 million from Acer Capital Group, Inc., Greenone.com Inc., and Partner Medical Solutions, the government's lawsuit alleges.
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According to Buchholz, 13 victims live in five states—Washington, Idaho, Oregon, Montana and Maine—and include an 82-year-old man.
The SEC wants a federal judge to permanently block Garcia from all future security sales activities and for both defendants "to disgorge their ill-gotten gains."
It's unknown at this time which of Orange County's five federal judges will handle the case.
Neither Garcia nor Woods has filed a court response to the accusations.