Judge freezes assets of Utah real estate firm
A federal judge has ordered a freeze on the assets of a Salt Lake City company and its operators after federal regulators sued, alleging it was a Ponzi scheme that took $2.5 million from 75 investors.
The Securities and Exchange Commission obtained the order against Art Intellect Inc., a company it said was controlled by Patrick Merrill Brody, 46, and Laura A. Roser, 30, a married couple living in Salt Lake City.
Art Intellect solicited investors through two other companies, Mason Hill and Virtual MG, the SEC said. Also named in the lawsuit was Gordon D. Wood, 41, Salt Lake City, the president of Mason Hill.
The suit alleges the trio used Mason Hill to solicit investments, saying the money would be used to purchase distressed properties, rehabilitate them and then find renters. They allegedly guaranteed returns of up to 30 percent.
Regulators contend investor funds instead went to cover Mason Hill's operating expenses, sales commissions, payments for Brody and Roser's "lavish" personal expenses, and to pay earlier investors, the practice typical for a Ponzi scheme. The personal expenses allegedly included trips to New York, Florida, Las Vegas and San Diego, as well as cruises, rare book purchases, a house and car payments, salary for a personal cook and payments for a Cadillac Escalante for Brody's criminal defense attorney.
U.S. District Judge Tena Campbell also appointed attorney Wayne Klein as receiver for the companies, meaning he takes control of their operations, assets and books.
The lawsuit seeks a preliminary and permanent injunctions against the companies and their operators, as well as return of funds and penalties.
A message left at Mason Hill seeking comment was not returned.
Brody previously was sued by the SEC and also was convicted of a misdemeanor charge of failure to file tax returns, according to the latest lawsuit.