SEC Alleges Ponzi Scheme in Chicago Real Estate Investment

By William Vogeler, Esq. on August 29, 2018 | Last updated on March 21, 2019

The Securities and Exchange Commission filed suit to stop an alleged Ponzi scheme that promised high returns for real estate investments in Chicago.

The complaint says hundreds of investors dumped at least $135 million into EquityBuild to buy, renovate, and develop real estate in the south side. The father-son enterprise raised money from more than 900 investors and continues to solicit more.

According to reports, they promised 12 to 20 percent returns. Investors say they aren't getting anything like that return on their money now.

Social Media Presence

The scheme involved "an attractive social media marketing presence," according to reports. The Cohens advertised high returns, but did not disclose their high fees -- 15 to 30 percent off the top.

"In many cases they did this by telling investors that the properties being purchased cost substantially more than what Defendants actually paid for them," the lawsuit claims. "This meant that investors were not only overcharged, but the real estate supposedly securing their investments was worth much less that what Defendants told investors."

EquityBuild began soliciting investments in 2010. Jerome Cohen is president and CEO of the company; His son Shaun Cohen is president of EquityBuild Finance.

When the real estate projects started losing money, the SEC said, the investment program "devolved into a Ponzi scheme." The defendants started paying earlier investors with money from new investors, the lawsuit says.

"Getting Very Nervous"

Some could see it coming. Pat Marco, a real estate attorney, posted his observations three years ago.

"It looks like Equity Build pays 8 to 10 percent then to pay these early investors with new ones who then receive 12 to 14 percent and so on until they sell the property and pay everyone," he wrote on

Investor Barry Armstrong said he made $24,000 on his first $100,000. But later, he said, he was "getting very nervous."

"I suggest people proceed with extreme caution with," he posted.

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