A Lexington lawyer faces prison time for defrauding his clientele of $2 million by concealing info about actual estate qualities he was encouraging them to make investments in.
A U.S. District Courtroom jury on Friday unanimously found Douglas Hawkins, of Richmond, responsible of trader advisor fraud, securities fraud and two counts of wire fraud.
Hawkins was an attorney, investor advisor consultant and certified economic planner, and owned his have firm, Rite Economic Team, according to court docket documents.
In Might 2013, Hawkins started doing work with two companies in Oregon, Legitimate Wholesale Residences and Portland Funding, that provided buyers the chance to order promissory notes secured by genuine estate deeds of have confidence in. A promissory take note is a written guarantee by 1 party to make a payment of income at a day in the long term.
Hawkins offered the order of notes to consumers as a way to diversify their expenditure portfolios, and was paid out a fee for the sale.
Even though the paperwork explained a take note and house loan, according to court files Hawkins led clientele to believe that they have been paying for possession fascination in a piece of true estate. In accordance to the U.S. Attorney’s Place of work, the houses were being found in Jackson, Mississippi.
Numerous of the attributes purchasers had been acquiring ended up not in great issue and required significant repairs, regardless of Hawkins telling them or else, documents mentioned.
Hawkins also convinced investors the house that secured their property finance loan was rented, when it was not, and continued to make wrong recommendations about the homes.
“Hawkins withheld critical details about the attributes when advising his purchasers to invest, which include that many ended up uninhabitable, rent selection was burdensome, and that the houses ended up frequently subject to theft and vandalism,” the U.S. Attorney’s Place of work said. “He also failed to tell his shoppers that their investment funds would be utilized for functions other than their attributes, together with paying out other traders and buying a Harley Davidson for an employee.”
In late 2015, the Oregon-based mostly businesses commenced to default on desire payments to the observe purchasers and went defunct in August 2016.
In 2016, Hawkins founded RPB Rentals MS, LLC for the reason of transferring ownership of the Oregon companies’ homes and running the notes.
“Hawkins used RPB to purchase extra homes and borrowed income from new investors and secured the notes with deeds of believe in,” courtroom paperwork condition. “In essence, RPB ongoing the very same unsuccessful small business model of (the Oregon businesses).
“The business enterprise design fared a very little greater under RPB and cash flow from the residences did not deal with fascination on the notes. As a consequence, numerous of the traders suffered major losses of probable money and principal.”
According to court docket documents, in most scenarios, Hawkins led his purchasers to imagine their income was designated for the obtain or renovation of a particular piece of authentic estate, but the income was “commingled,” or mixed, with other investors’ funds and “used any time Douglas Hawkins required it.”
According to the U.S. Attorney’s Workplace, consumers are alleged to have invested $2 million to Hawkins for the attributes.
He was indicted in Oct 2021.
“We are certainly let down in the conviction, we feel that the jury regarded the proof and did not consider their choice lightly, but we are surely disappointed,” Hawkins’ lawyer, Whitney Accurate Lawson, explained to the Herald-Leader.
Hawkins’ sentencing is scheduled for April 23 in Lexington. He faces up to 65 yrs in jail for the charges, opportunity fines and a judgment of restitution.