The Corporation Commission ordered multiple respondents to pay restitution and administrative penalties for fraudulently offering and selling unregistered LLC membership units and shares of stock involving real estate.
The Commission ordered respondent American Realty Partners, LLC and Sean Zarinegar to pay $11,170,327 in restitution. The Commission also ordered Zarinegar and Performance Realty Management, LLC, to pay $2,159,101 in restitution, and ordered Zarinegar and Corix Bioscience, Inc.to pay $3,035,192 in restitution. In addition, the Commission imposed administrative penalties totaling $850,000.
The Commission found these companies were “fix-and-flip” or “buy-and-hold” real estate companies that would purchase residential real estate, fix them up, and then resell them. The Commission found the respondents, while not registered with the Commission to sell securities, offered and sold in Arizona membership units and shares of stock. In total, the Commission found respondents raised at least $16,579,304 from at least 297 investors.
The Commission found the respondents made false and misleading statements to investors regarding Zarinegar’s and Combs’ multiple previous orders for fraud and securities violations, Zarinegar’s losses in prior real estate companies, management compensation, the use of proceeds, and the use of financing to purchase the properties. Prior to investing, at least two investors were told that all properties would be purchased with cash rather than with financing.
Additionally, the Commission found investment funds were used to purchase personal vehicles for Mr. Zarinegar, Kori Zarinegar, and Mr. Combs, and transferred on at least two occasions to Zarinegar’s personal account.
To date, investors have not received any return on their investments.