Texas Real Estate Investor Scams Lead to Investor Losses and Criminal Cases

An Austin man convicted of Texas securities fraud has been sentenced to 15 years in prison. James Elton Warr was also convicted on other multiple first-degree felonies, including money laundering, theft, and misapplication of fiduciary property in Travis County.

According to prosecutors, Warr stole $1.1M from investors who purchased contracts in unregistered real estate notes through his Warr Investment Group. He and his firm were not registered to sell these securities. Still, Warr promised 8% yearly interest, compounded monthly, and he touted the investments as “no-risk.”

The real estate deals were marketed as a safe alternative to more traditional investments. Warr promoted them online, including on YouTube.

Investors were told that their funds would go toward buying more notes or property and that Warr would only make money after they were paid. Instead, he didn’t invest enough of their funds to make the profits that he promised. Warr did, however, use investor money to purchase an expensive car, pay commission to an unregistered sales agent, and cover other expenses that were not connected to the real estate investments. War also suggested that investors move their money to an IRA that he secretly controlled.

The Texas State Securities Board began probing Warr seven years ago. An emergency cease and desist order was sent to him and his firm. In 2011, as a result of the State Securities Board’s action, the Office of the Texas Attorney General asked that Warr Investment Group and another company be put in receivership. Warr Investment Group’s assets were frozen and investors got back 44% of their money.

Warr was indicted by a grand jury on criminal charges last year.

Federal Grand Jury Issues Indictments In Texas Investor Scam
In another Texas real estate investor scam, a federal grand jury in Dallas has indicted two men, Joshua Pugh and Glen Clifton, with five counts of wire fraud and one count of conspiracy to commit wire fraud related to an “elaborate scheme” to defraud one investor out of about $1M.

The criminal indictment said that early last year, Clifton contact their targeted person and touted the chance to invest in a fake elite real estate company called Sectors Global Management. He claimed that the company had the backing of “elite” persons.

Clifton claimed that he and Pugh, whom he called “Joshua Wealth” had ties to the Illuminati, which he said was an organization of high net worth individuals who had given control of the planet to 43 exclusive families. Clifton claimed that the individual had been chosen as an investor for reasons that even he hadn’t been made aware.

Clifton and Pugh are accused of using chauffeurs, bodyguards, and helicopters, as well as fabricating conference calls and video conversations with these supposed global leaders to convince their target to invest. They also allegedly employed fake documents, including falsified tax paperwork, letters to big corporations, emails about business deals, and communications that supposedly discussed endorsements with NBA and Under Armour.

Pugh told their victim that if the investment demands weren’t met, his assets would be seized and he would go to jail.

The investor was reportedly so scared of the consequences, if he failed to comply, that he invested about $1M with the supposed real estate company. Pugh and Clifton allegedly used the funds to buy expensive cars, a mink coat, Louis Vuitton merchandise, a private jet, and chartered helicopter flights. Pugh also allegedly paid another person $400 a month to remove and insert his contact lenses for him every day.

Our Texas securities fraud lawyers represent investors throughout the state. Contact Shepherd Smith Edwards and Kantas, LTD LLP today.

James Elton Warr: Sentenced, 15 Years, Texas State Securities Board (PDF)

Federal Grand Jury Indicts Two Men in $1 Million Fraud Scheme, Justice.gov, December 8, 2017

More Blog Posts:
Westport Capital Markets LLC is Accused of Undisclosed Markups as Investors Lose Over $1M, Stockbroker Fraud Blog, December 11, 2017

Ex-Financial Adviser Settles Private Equity Fund Fraud Charges in Texas, Stockbroker Fraud Blog, December 8, 2017

Credit Suisse Resolves NY Regulator’s Forex Rigging Probe for $135M, Institutional Investor Securities Blog, November 15, 2017