Members Allegedly Operated a Fraudulent Real Estate Investment Company, McKinley Mortgage Co. LLC, which Allegedly Bilked Hundreds of Investors

Three family members, Tobias Preston, his brother, Charles Preston, and his son, Caleb Preston, allegedly operated a fraudulent real estate investment company, McKinley Mortgage Co. LLC (McKinley), which was allegedly a “years-long scheme to bilk hundreds of investors”, according to an SEC Complaint under review by attorney Paul Scarlato.

Attorney Paul Scarlato, of the Goldman, Scarlato & Penny law firm, is investigating activity related to McKinley Mortgage Co. LLC’s alleged real estate scheme. Investors who believe they may have lost money in activity related to McKinley Mortgage Co. LLC’s alleged real estate scheme are encouraged to contact attorney Paul Scarlato with any useful information or for a free, no obligation discussion about their options.

Tobias Preston, his brother, Charles Preston, and his son, Caleb Preston, from 2012 through 2016, allegedly led investors in the fund, Alaska Financial Company III, and their affiliates, to believe that they were secure in their fund when in reality, the fund was insolvent, according to the aforementioned SEC Complaint.

During said time the Prestons and McKinley allegedly raised more than $66 million from approximately 300 investors, most of whom were retail investors, the Complaint notes.

Tobias Preston, McKinley President, Ordered to Return Assets and Pay a $2.5 Million Penalty; Charles and Caleb Preston to Pay $425,000 & $150,000 Penalties, Respectively

The Prestons and McKinley allegedly told investors that their fund, Alaska Financial Company III, purportedly earned high returns from its portfolio and investments were secure, according to the aforementioned SEC Complaint under review by attorney Paul Scarlato.

The SEC has also stated that the fund was allegedly insolvent and unable to generate sufficient revenue to meet its interest obligations for many years, the Complaint notes. What is more, although a portion of the raised funds were invested as promised to investors, the SEC alleges that Tobias Preston diverted more than $17 million to fund personal businesses and to pay for personal expenses, the Complaint states.

McKinley also allegedly misused an additional $14 million to pay for its own operational expenses, according to the SEC Complaint.

As a result, Tobias Preston, McKinley president and founder, will be ordered to return assets he allegedly improperly acquired and to pay a $2.5 million penalty, while Charles Preston and Caleb Preston agreed to pay penalties of $425,000 and $150,000, the Complaint states.

Finally, McKinley Mortgage will turn over operations to a “professional manager” who will be reviewed by the SEC, the SEC reports. Without admitting or denying the SEC’s allegations, all aforementioned defendants reportedly agreed to permanent injunctions against future violations, the Complaint states.

Securities Lawyer Investigating

The Goldman, Scarlato & Penny law firm represents investors who lose money as a result of investment-related fraud or misconduct and are currently investigating McKinley Mortgage Co. LLC’s alleged real estate scheme. The firm takes most cases of this type on a contingency fee basis and advance the case costs, and only gets paid for their fees and costs out of money recovered for clients. Attorney Paul Scarlato, a securities lawyer has represented thousands of victimized investors across the country and around the world in cases ranging from arbitrations to class actions, and has helped recover tens of millions of dollars on behalf of investors.

Investors who believe they lost money as a result of McKinley Mortgage Co. LLC’s alleged real estate scheme may contact attorney Paul Scarlato for a free no-obligation evaluation of their recovery options, at 888-998-0530, via email at scarlato@lawgsp.com, or through the contact form on this webpage.