John Koral, a former partner in the bankrupt hard-money lender US Capital, has been and is ordered to repay $10.3 million, state securities regulators said Wednesday.
The order was approved by a District Court Judge just a few months after Koral’s partner agreed to a . The Division of Securities says Koral shares in that liability. The partners operated Boulder-based US Capital from 2006 to 2011.
Koral, of Boulder, securities commissioner Gerald Rome, nor did he participate in any phase of the litigation. The injunction followed the entry of a default judgment against him.
According to Rome’s office, US Capital specialized in making real-estate purchase loans to commercial borrowers who were not eligible for traditional loans. To fund the loans, the company obtained money from individuals and promised the investors interest. The investors also were promised that the loans were secured by the real estate and that they would have priority over other loans on the properties.
However an investigation showed the investor money was used as loans to at least 10 other companies owned by Koral and Weinstein. Also, the real estate that was to secure the investors’ loans was used to secure bank loans
, the Securities Division said.
US Capital filed for bankruptcy in late 2010, leaving about 30 people holding promissory notes worth more than $10 million.
“We hope investors who read this will be motivated to do the homework necessary to make sure they have all the information before investing” Rome said in a news release. “This is especially true when you are investing in private transactions like this, where you are not dealing with licensed individuals or registered securities. Contact our office and we can help to identify potential red flags.”
