Strategic Legacy Investment Group Inc. and SLIG High Interest Liquid Savings Co., accused of participating in a fraudulent real estate investment scheme, have agreed to pay over $8.4 million to settle claims related to a $17.5 million scam that deceived more than 150 investors by marketing "collateralized" and "recession-proof" securities (promissory notes). In final judgments issued in California federal court, U.S. District Judge Fernando M. Olguinruled that both companies would pay the U.S. Securities and Exchange Commission (SEC) $6.5 million and nearly $1.9 million, respectively. Strategic Legacy Investment Group Inc. must pay nearly $4.9 million in disgorgement, more than $487,000 in prejudgment interest, and a $1.15 million civil penalty. SLIG High Interest Liquid Savings Co. will pay nearly $648,000 in disgorgement, over $64,000 in prejudgment interest, and a $1.15 million civil penalty. On the same day, the SEC moved decisively, seeking over $1.2 million in penalties against Pedram Abraham Mehrian, the alleged mastermind behind the fraudulent scheme. As president, chairman, and majority shareholder, Mehrian commanded absolute power over the company's operations, directing every decision and orchestrating the scam. His was the driving force behind the entire scheme. In a sweeping judgment, the court ordered Mehrian to return $935,000 in disgorgement, pay $44,000 in prejudgment interest, and an additional $230,000 in civil penalties. The total penalty, exceeding $1.2 million, must be paid in full to the defrauded promissory note holders. This request follows a January SEC judgment against Mehrian that barred him from future violations of federal securities laws but deferred civil penalty decisions What does disgorgement mean? Disgorgement refers to the court-ordered repayment of profits that were unlawfully obtained. It requires wrongdoers to return funds acquired through illegal or unethical business practices, often with added interest or penalties. The purpose is to restore those who were harmed by the misconduct, in this case, the promissory note holders.. Mehrian consented to the January judgment without admitting or denying the SEC’s allegations, he played the fifth. Judge Olguin had set a March deadline for filing a monetary agreement for Mehrian, but negotiations stalled after Mehrian was arrested by the FBI for another crime and charged with criminal wire fraud in February 2024 for allegedly scheming to obtain loans through the Economic Injury Disaster Loan Program under the Coronavirus Aid, Relief, and Economic Security Act. The SEC reported that Mehrian missed the court deadline to return a signed stipulation. The February indictment accuses Mehrian of using five entities (LLCs) to defraud the Small Business Administration by submitting false information and producing fraudulent documentation to secure loans. While he aimed to steal $2 million, he successfully obtained around $600,000 during the COVID-19 pandemic. Based on court documents, Mehrian pleaded not guilty and was released on a $50,000 bond, paid by his mother, his release has very strict bail conditions in place to protect investors for further damage as he awaits his trial, if found guilty he could serve time in federal prison. The SEC lawsuit alleged that between January 2018 and October 2022, Pedram Mehrian, through Strategic Legacy Investment Group Inc. and SLIG High Interest Liquid Savings Co., defrauded investors by offering promissory notes with "guaranteed interest" rates that over exceeded market norms. These notes were falsely advertised and marketed as being backed by a $342 million SLIG portfolio of real estate assets, when in reality SLIG did not own any assets. Some of these assets hadn't even been constructed, they existed only as models and drawings. Furthermore, Mehrian misled investors by claiming the notes would "outpace inflation" during a period of rising inflation, a promise that proved false. The SEC is represented by Gary Y. Leung and Daniel S. Lim. The case is Securities and Exchange Commission v. Mehrian et al., case number 2:23-cv-08009, in the U.S. District Court for the Central District of California. The criminal case of five counts of wire fraud United States v. Mehrian is 2:24-cr-00084-GW and prosecuted by United States Attorney E. Martin Estrada, along with Assistant United States Attorneys Mack E. Jenkins, Chief of the Criminal Division, Ranee A. Katzenstein, Chief of the Major Frauds Section, and Scott Paetty, Deputy Chief of the Major Frauds Section. Source Law360UK | 
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