Two Marin County real estate and investment companies under federal investigation were engaged in “serious misconduct” over nearly three decades, according to a consultant hired to restructure the companies.
In a letter to nearly 1,300 investors on June 28, Michael Hogan hinted at the type of conduct that had been taking place at the Novato-based companies — Professional Financial Investors Inc. and its associated Professional Investors Security Fund Inc. — before the death of owner Ken Casey in May at the age of 73.
“Shortly after Mr. Casey’s death, it came to light that interest payments could not be funded without new investment, but accepting new investments would have been a continuation of the misconduct,” Hogan wrote. “As such, within days of Mr. Casey’s death the companies put a halt to the misconduct, which has resulted in the suspension of new investment and interest payments, and the request for a SEC Investigation.”
The U.S. Securities and Exchange Commission investigation is expected to last as long as three months.
The companies were marketed as a leading commercial real estate owner in Marin County, with nearly 600,000 square feet of commercial warehouse and office space as well as close to 1,000 apartments in Marin and southern Sonoma counties.
Casey’s ex-wife and business partner Charlene Albanese hired the San Rafael law firm Ragghianti Freitas LLP to handle the transition of the companies. In its review of the companies’ investment history, the law firm found irregularities and asked the SEC to investigate.
Following the launch of the SEC probe, the law firm requested and received the resignations of the companies’ president, secretary and chief financial officer.
The law firm appointed Hogan, who is also managing director of the Armanino LLP financial consulting firm, to head the company as the new chief restructuring officer in June. The company is still operating with about 50 employees, though the company’s website has been nonfunctional since shortly after the investigation began.
“The ultimate goal here is to protect your capital investments to the fullest extent possible and thusly the underlying real estate assets of the business,” Hogan wrote in his letter on June 28. “The first step in doing so is to work expeditiously to get to the bottom of the questions and concerns around the structure and investment history of the PFI investments.”
Millions of dollars of investments remain frozen along with interest payments that some investors have come to rely on for their income and basic necessities. Several investors who spoke with the Independent Journal on Thursday said very little information has been provided other than the letters from Hogan and the companies’ attorney in June.
In the void…