“Specifically, Defendants represented that the Funds would pay distributions to investors that would be funded by cash available from operations — that is, income generated by the underlying properties,” the order states. “Instead, the Defendants engaged in Ponzi-like conduct, making distributions to investors that were funded, in part, with investors’ money.”

Third, marketing materials and operating documents falsely represented that Fund II would have an outside custodian and that Activated’s principals had made significant investments in Fund II.

“In fact, Fund II had no outside custodian, and Activated’s principals had not made significant investments in Fund II,” the SEC said.

Finally, defendants “falsely represented to at least one investor that Fund II had ‘just under’ $20M in assets under management,” according to the order.

“In fact, at the time, the fund had raised less than $6 million from investors,” the order states.

Burrell also misappropriated approximately $100,000 of investor funds, “most of which were categorized as ‘property improvement’ expenses,” the SEC said.

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