A Manhattan real estate fund manager has been charged with securities fraud, wire fraud, and aggravated identity theft in connection with his operation of a New York-based investment firm, Activated Capital, LLC.
Joshua Burrell, the defendant, sought to raise up to $75 million for Opportunity Zone Funds, which are vehicles for making real estate investments in economically distressed areas. Burrell touted Activated Capital’s Opportunity Zone Funds for delivering consistent and stable cash flows to investors through targeted eight percent annual distributions.
However, contrary to Burrell’s claims, Activated Capital’s funds did not generate enough income on their real estate investments to make those payments, and Burrell used investors’ money to help make up the shortfall. Burrell was arrested this morning in Richmond Heights, Missouri, and is expected to be presented tomorrow before United States Magistrate Judge in St. Louis federal court.
According to the allegations contained in the Indictment, unsealed today in Manhattan federal court, From in or about 2019 through in or about 2021, Burrell sought to obtain tens of millions of dollars of investments for the Activated Tax Advantaged Opportunity Fund, LLC, and Activated Capital Opportunity Zone Fund II, LLC (collectively, the ‘Activated OZ Funds’ or the ‘Funds’) based on fraudulent representations.
Burrell represented, in substance, that the money invested in the Activated OZ Funds would be used to purchase real estate properties in Opportunity Zones and that investors would receive distribution payments out of the Funds’ net real estate investment income. Contrary to those representations, Burrell caused the Activated OZ Funds to pay putative distributions in amounts greater than the Funds’ net income.
Burrell also falsely inflated Activate Capital’s assets under management in communications with prospective investors. To attract additional investment capital for the Activated OZ Funds, Burrell sought to establish a partnership with an investment bank headquartered in Manhattan (‘Company-1’). As part of Company-1’s diligence process, Company-1 asked Burrell for ‘[b]acking to show current fund proceeds/acquisitions made.’ In response to these requests, Burrell fabricated documents to make it appear that the Activated OZ Funds were more successful, owned more properties, and were in better financial condition than was actually the case.
The total distributions totaling approximately $470,000 were paid in a manner akin to a Ponzi scheme. Burrell fabricated additional documents to make it appear to Company-1 that the Activated OZ Funds were more successful and were in better financial condition than was actually the case.
Criminal Charges: Securities fraud, wire fraud, and aggravated identity theft.
City and State: New York.
Exact Date: Not specified.
Sentence or Outcome: Currently pending court proceedings.
Defendant: Joshua Burrell.
Dollar Amounts: Up to $75 million and $470,000 in distributions.
Related Federal Cases
- Joshua Burrell, Securities Fraud, New York 2023 · Connecticut
- Charlie Javice, $175M Investment Fraud, New York 2024 · New York
- Ledesma, Securities Fraud, New Mexico 2005 · New York
- Marcella Samuels, Mail Fraud, New York 2022 · New York
- Osakwe Ismael Osagbue, Mail Fraud, MD 2024 · Alabama
Key Facts
- State: New York
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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