A Florida-based real estate investment firm that has purchased numerous apartment buildings on Chicago’s South Side is being sued by the U.S. Securities and Exchange Commission for fraud.

EquityBuild, Inc., based in Marcos Island, Fla., has promised “enormous” opportunities to real estate investors, but the SEC says they are more likely to face enormous losses.

The SEC says the firm’s two owners, father and son Jerome and Shaun Cohen, have raised at least $135 million from some 900 investors since 2010, through EquityBuild and its subsidiary, EquityBuild Finance.

SEC investigators allege that EquityBuild is nothing more than a classic Ponzi scheme that uses money gained from new investors to pay supposed interest on investment of older investors.

The Cohens also allegedly defrauded their clients through undisclosed fees between 15-30 percent on each investment. Sales personnel purportedly told new clients that the properties they were investing in were worth far more than they really were

The lawsuit said EquityBuild continues to seek investors to invest in its real estate debt, promising rich returns as high as 17 percent while portraying the investments as low risk.

The company’s website, which is still up, features six apartment building, and promises, “We make real estate work for you.”

“For decades, our proven turn-key system has generated reliable, passive income for our clients,” the website promises. However, the SEC said, they never disclosed their own personal bankruptcies, filed as recently as 2010.

It is unclear just how many Chicago properties EquityBuild owns, however a cursory viewing of the Cook County Recorder of Deeds website shows more than 250 transactions involving the firm.

Things apparently began to fall apart for the Cohens around 2015. Between January 2015 and February 2017, earlier investors were paid some $14.5 million in interest, despite the EquityBuild properties supposedly supporting those payments generating only $3.8 million.

The Cohens, the SEC suit states, “never told investors that they were relying on fresh investor funds, rather than income-producing properties.” The Cohens recently emailed a video to their earliest investor, acknowledging their lack of cash flow and admitting they were unable to make any more interest payments. But later investors, the SEC states, were never informed of the situation.

The lawsuit seeks a permanent injunction against the Cohens and EquityBuilders, and recovery of all moneys gained through fraud.

—- SEC lawsuit alleges South Side real estate part of Ponzi scheme —