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Georgia-Based Attorney Robert P. Copeland charged in $28 million fraud: Ponzi Scheme

By Amarendra Bhushan for CEOWORLD Magazine Updated:April 10, 2009

The Securities and Exchange Commission charged, Georgia-based Marietta real estate attorney Thursday for operating a Ponzi scheme that sold promissory notes to raise funds that were purportedly invested in real estate transactions, including private mortgages.

Cheating more than 125 investors out of $28 million by promising returns of up to 15 percent by placing their money in real estate financing and development.

According to the SEC, 48-year-old Robert P. Copeland promoted investment opportunities verbally and through written materials with false claims of earning interest of 15 to 18 percent in a year or less.

Robert P. Copeland fraudulently raised more than $35 million from at least 140 investors in Georgia and several other states.

Federal authorities said Copeland, used several businesses to carry out the scheme —- Axiom Development Group Inc., We Buy Inc., Robert P. Copeland P.C. and HBV Services Inc.

He actually used very little of the investor funds in connection with real estate acquisition or development, and instead deposited investor funds into four bank accounts in the name of his law firm. He raised more than $40 million from more than 140 investors in Georgia and other states, the Securities and Exchange Commission complaint said.

SEC complaint alleges Copeland co-mingled the investment funds with his own law firm’s, Robert P. Copeland P.C., and spent millions of the money for personal use, including: for his personal residence, vehicles and “expensive artwork.”

“Comparatively few assets derived from the raised funds are left to pay the millions of dollars owed to the remaining investors,” the SEC’s complaint states.

Investigators said Robert P. Copeland found his victims for his “Ponzi scheme” through seminars and financial planners, promising them as much as 15 percent on their investments in less than a year. He allegedly told investors their money was backed by real estate developments, mortgages or bridge loans.

According to an FBI investigation, Copeland collected about $40 million in five years, but lost $28 million of it.

U.S. SECURITIES AND EXCHANGE COMMISSION Complaint downlod

U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release

The Securities and Exchange Commission (“Commission”) filed a Complaint for Injunctive and Other Relief (“Complaint”) in the United States District Court for the Northern District of Georgia against Robert P. Copeland (“Copeland”). The Complaint sets forth a classic Ponzi scheme operated by Copeland, in which he used new investor funds to make payment obligations to earlier investors.

The Complaint alleges that from at least 2004 through January 2009 Copeland, a Georgia resident and an attorney licensed to practice in the State of Georgia, fraudulently raised over $35 million from at least 140 investors in several states, including Georgia. The Complaint further alleges that Copeland promoted investments orally and through written materials claiming to earn 15-18 percent interest per year, and claiming that investor funds would be loaned in connection with real estate transactions, including private mortgage lending. Through entities which he controlled, Copeland directed the unregistered offer and sale of promissory notes evidencing the investor loans. The notes were often collateralized by security deeds to which Copeland signed the names of fictitious persons.

The Complaint alleges that Copeland represented to investors that the loans were safe and secured by real estate. In reality, Copeland used comparatively few of the investor funds in connection with real estate acquisition or development. The Complaint also alleges that Copeland promised, among other things, a current rate of return of 15 percent and represented to investors past returns as high as 18 percent. In reality, the representations were false and misleading because Copeland never consistently generated 15 percent annual returns and was not investing the funds as represented. The Complaint further alleges that Copeland deposited investor funds into four bank accounts in the name of his law firm, and that he misappropriated millions of dollars of investor funds for his personal use, spending the funds in connection with his personal residence, vehicles, and expensive artwork, among other things.

The Complaint alleges that Copeland has violated the registration and antifraud provisions of the federal securities laws, Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission’s Complaint seeks (i) a permanent injunction against future violations; (ii) disgorgement of ill-gotten gains plus prejudgment interest; and (iii) imposition of civil penalties.

The Commission thanks the United States Attorney’s Office for the Northern District of Georgia for its assistance in this matter.

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