MG Capital Management LP CEO Charged with Securities Fraud | Goodman & Nekvasil P.A. May Recover Investor Losses
Acting Manhattan U.S. Attorney Audrey Strauss said: “Eric Malley allegedly promised his clients that they would reap the benefits of owning equity in Manhattan real estate through his time-tested, sophisticated, debt-free investment strategy. As alleged, those promises were lies. Malley lied about his prior funds’ existence and performance, and he lied in promising clients that the funds were free of debt and leased to prominent corporate tenants. While his investors lost money, Malley enriched himself. We will continue to work with our law enforcement partners to protect investors from these types of deceptive practices.”
FBI Assistant Director William F. Sweeney Jr. said: “As alleged, Malley, acting as CEO of an investment firm he founded, solicited investors with material misrepresentations and lies pertaining to luxury residential real estate and several investment funds. Ultimately, the investors, many of whom had entrusted Malley with all of their retirement savings, lost nearly everything. Today’s action should serve as a reminder to fraudsters who seek to prey on unwitting investors that the FBI and our partners will not waver in our commitment to bring them to justice.”
As alleged in the Complaint unsealed today in Manhattan federal Court:
MALLEY founded MG Capital Management L.P. (“MG Capital”) in approximately January 2013, and served as its chief executive officer (“CEO”) from that time until approximately December 2019. MALLEY described MG Capital as an opportunity for investors to invest in luxury residential real estate properties through limited partnership interests, and formed two real estate investment funds, MG Capital Management Residential Fund III (“Fund III”) and MG Capital Management Residential Fund IV (“Fund IV”) (collectively, “the Funds”), in approximately February 2014 and September 2017, respectively.
In connection with marketing the Funds to investors, MALLEY touted two purportedly extremely successful prior funds he had formed, Fund I and Fund II. MALLEY also assured investors that the Funds would be and were debt-free, and that the properties held by the Funds would be and were leased primarily to corporate tenants. MALLEY’s representations about the existence and performance of Funds I and II were largely fabricated. Furthermore, the Funds were not debt-free, but instead held mortgaged properties, and the properties that made up the Funds were almost entirely leased to individual, not corporate, tenants.
Investors in the Funds, many of whom invested the entirety of their retirement savings, lost all or almost all of their investments. As to Fund III, in total, approximately 60 investors invested approximately $23 million. Fund III incurred net operating losses of approximately $860,000, and its investors never received either distributions or a return of their investments. MALLEY nevertheless distributed at least approximately $278,000 to himself in his capacity as general partner. As to Fund IV, in total, approximately 275 investors invested approximately $35 million. Fund IV incurred millions of dollars in losses, and MALLEY did not disclose those losses until approximately two years into Fund IV’s operation.
In or about mid-December 2019, MALLEY stepped down from his role as CEO of MG Capital. Between in or about February 2020 and on or about March 31, 2020 – after MALLEY had become aware that the U.S. Securities and Exchange Commission (“SEC”) was investigating him – MALLEY accessed MG Capital’s server and deleted approximately 10,000 files from the server, including broker information and closing documents detailing the closing costs associated with acquisition of properties, which were used to obtain funding from the Funds’ administrators.
Investors in MG Capital Management LP May Recover their Losses with Goodman & Nekvasil, P.A.
If you invested in MG Capital Management LP, Goodman & Nekvasil, P.A. may help you. Goodman & Nekvasil, P.A., a St. Petersburg, FL law firm with a national practice representing victimized investors, has recovered more than $200 million dollars on behalf of victimized investors.
All our cases are handled on a purely contingency fee basis by Kalju Nekvasil, Esq., formerly regional counsel with the NASD, now known as FINRA. Kalju Nekvasil, Esq. has practiced in this area of the law for more than 35 years.
There is no charge for an evaluation of your case. Further, we handle our cases on a contingency fee basis. This means that unless we recover money for you, we charge no attorney’s fee. Unless you recover any money, you pay us nothing, not even the costs and expenses which the firm will advance on your behalf.
If you incurred investment losses with MG Capital Management LP and would like your case evaluated by a securities attorney (again, there is no charge for an evaluation and all cases are handled on a purely contingency fee basis), please contact us.