It was the end of an era.
The Bancor Group, the investment arm of Bank of America, had sold a string of $1 billion condos and apartment buildings in suburban Atlanta for $1.4 billion to local buyers in the first quarter of 2019.
At the same time, the U.S. Securities and Exchange Commission had slapped the firm with a $5 billion civil fine and imposed new capital-gains rules that would have cut into the profits the firm made selling off the luxury properties.
As it turned out, the BAC was not the only one to have made money on the condos and apartments.
The Securities and Commissions’ enforcement arm, the SEC’s Enforcement Division, also was investigating a pair of Bancors’ luxury properties, both in the Atlanta area, for potential violations of the Capital Gains Tax Act.
And the SEC, along with a state attorney general, was also looking into Bancour’s purchase of the former Triton Tower in downtown Las Vegas.
All of this came after years of scrutiny, and after an aggressive campaign to fight the charges, including a $100 million settlement with Bancours last year.
But in August 2019, when the SEC finally issued its enforcement action against Bancurys, the firm faced a new round of scrutiny.
A new SEC filing revealed that the SEC was investigating Bancorporate for alleged violations of federal securities laws related to the sale of condominium-style condos at high prices in the suburbs, in violation of the capital gains laws.
The filing, which was not previously public, provided new details about the BANCOR probe.
It also showed the SEC investigation was continuing.
After the filing, the company issued a statement saying the SEC probe had nothing to do with its condo sales and that it was “seeking to protect the integrity of our business.”
The SEC investigation focused on the sale, in the early 2020s, of more than a dozen condo-style units at a former Bancrts headquarters complex in Atlanta, according to a copy of the SEC report obtained by CNN.
In a second SEC filing, filed after the second SEC investigation, the agency said the unit sales were in violation for two reasons.
One was that the units were sold to non-resident investors who were not subject to the capital-gain tax laws.
“The SEC’s investigation was not in connection with BANCURY’s sales or other activities related to these properties, but the SEC believes there may have been other potential violations that could have been disclosed in the initial filings,” the SEC wrote in a statement.
While the SEC has never previously charged Bancurs, its enforcement actions have been more aggressive in recent years, and the agency has pursued the firm for years for alleged mismanagement of the BNCL, the real estate investment trust that was the real moneymaker for the Bantustans.
The SEC filed a civil complaint with the Securities and Futures Commission against BANCurys last summer, alleging that Bancys employees failed to keep proper records and that BANCs sales of condos and apartments in Georgia violated federal securities law.
In December, the Securities Commission and the Department of Justice jointly filed criminal charges against Bancers senior executives and employees for allegedly failing to register as a security under the Capital Investment Act.
In January, the DOJ charged a senior executive of BANCurs, John P. Jones, with money laundering and conspiracy in connection to a multi-million dollar fraud scheme.
The Bancar’s own internal investigations, which have not been public, found that the company’s sales of condos and other luxury properties were part of a larger scheme to conceal assets and conceal income from the government, according a person familiar with the investigation who spoke on condition of anonymity because of the ongoing criminal investigation.
In the case of the Tritons condos, the case went to trial last year and was eventually settled in March.
Although the SEC ultimately determined that the condos were not registered as a securities investment, it did not impose a $25 million penalty for the company.
Bancursts attorneys did not respond to a request for comment on the SEC case.
This is a developing story.
Stay tuned for more details.