US Capital & Lee Weinstein & John Koral Colorado sues US Capital and its former exceutives for violation of anti-fraud laws Boulder Colorado
DENVER — Colorado Securities Commissioner Gerald Rome announced Sept. 29th, 2014, that he has filed a civil complaint in Denver District Court against two individuals and their related business alleging that they have violated the anti-fraud provisions of the Colorado Securities Act in connection with raising funds for their hard money-mortgage lending company, US Capital, Inc., formerly a Boulder, Colo. company.
In addition to US Capital, the complaint names former US Capital executives, Lee Weinstein and John Koral, both of Boulder.
In the complaint, the Commissioner alleges that US Capital operated as a so-called "hard money lender" that specialized in making loans to commercial borrowers who may not qualify for traditional bank financing to purchase real estate. In order to fund these loans, Koral and Weinstein obtained funding in excess of $7.8 million from investors. When obtaining these investor funds, the complaint alleges that investors believed their investments were secured by the underlying real estate.
The complaint further alleges that Koral and Weinstein, rather than securing the investor funds with the real estate, used the real estate to secure bank loans, Koral’s own personal debt, and to secure loans to Koral and Weinstein’s other companies, all to the detriment of the investors.
According to the complaint, US Capital eventually was unable to meet its obligations to the investors and other creditors and went bankrupt, with the investors unable to recover their investments.
The Commissioner’s complaint alleges that US Capital, Koral, and Weinstein violated Section 501(1) of the Colorado Securities Act and seeks a permanent injunction, restitution and disgorgement of ill-gotten gains.
A copy of the Complaint can be obtained by calling the Division of Securities, part of the Department of Regulatory Agencies (DORA), at 303-894-2320.