SEC v. Chicago D&P, Inc.; Patricia Morgen; and Shalom Gibson, No. LR-18694, Northern District of California — Press Release
raw: Chicago D&P, Inc., Patricia Morgen, and Shalom Gibson
Chicago D&P, Inc., Patricia Morgen, and Shalom Gibson, No. LR-18694
The SEC charged Patricia Morgen and her son Shalom Gibson with operating a $6 million-plus Ponzi scheme through Chicago D&P, Inc., promising investors 36%+ annual returns by falsely claiming funds would buy real estate, while diverting hundreds of thousands for personal use and paying old investors with new money, leading to a court-ordered asset freeze after they tried to withdraw $300,000 in cash.
The SEC alleges that Chicago D&P, Inc., led by Patricia Morgen and her son Shalom Gibson, raised over $6 million from hundreds of investors since 2001 by falsely guaranteeing annual returns of over 36% and promising to double investments within a year. The defendants claimed investor funds would be used to acquire profitable real estate, but instead diverted hundreds of thousands of dollars to personal expenses and used new investor money to pay fake returns, constituting a classic Ponzi scheme. After SEC subpoenas, Morgen and Gibson attempted to withdraw $300,000 in cash and cashier’s checks, prompting a federal court to freeze all their assets—including those of Gibson’s entity Realtopia, Inc.—and the SEC has charged them with violating Sections 5(a), 5(c), 17(a) of the Securities Act and Section 10(b) and Rule 10b-5 of the Exchange Act, seeking injunctions, disgorgement, and civil penalties.
The Securities and Exchange Commission has charged Patricia Morgen, founder and president of Chicago D&P, Inc., and her son Shalom Gibson with operating a fraudulent Ponzi scheme that raised over $6 million from hundreds of investors nationwide since 2001. The defendants misled investors by falsely claiming their funds would be used to acquire real estate that would generate 'safe' and 'phenomenal' returns, while in reality, they paid earlier investors with money from new investors and diverted hundreds of thousands of dollars to personal use. After receiving SEC subpoenas over the weekend, Morgen and Gibson attempted to withdraw $300,000 in cash and cashier’s checks, triggering an emergency court order to freeze all assets controlled by Chicago D&P, Morgen, Gibson, and Gibson’s entity Realtopia, Inc. The SEC’s complaint, filed in federal court in San Francisco, alleges violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. The agency is seeking permanent injunctions to prevent future violations, disgorgement of all ill-gotten gains, and civil penalties. The scheme relied on fabricated reports of profitability to maintain investor confidence, with payments to early investors serving as the illusion of success. The court’s asset freeze was critical to preserving funds for potential restitution to victims and preventing further dissipation of investor capital.
Exhibits & Attached Documents (1)
Extracted insights
- $6.00M $6 million $1M–$10M
- $300K $300,000 $100K–$1M
- agency the securities and exchange commission
- The Securities and Exchange Commission announced it has obtained an order freezing the assets of Chicago D&P, Inc.
- The Securities and Exchange Commission obtained order freezing the assets of Chicago D&P, Inc.
- Chicago D&P, Inc. raised millions of dollars from hundreds of investors nationwide since 2001
- Chicago D&P, Inc. raised over $6 million in the last six months alone
- Chicago D&P, Inc. lured investors into a fraudulent Ponzi scheme
- Chicago D&P, Inc. guaranteed profits of over 36% per year
- Chicago D&P, Inc. promised to double investments
The Securities and Exchange Commission today announced that it has obtained an order freezing the assets of Chicago D&P, Inc., a purported real estate company based in Emeryville, California (with offices in Reno, Nevada) that has raised millions of dollars from hundreds of investors nationwide since 2001 (including over $6 million in the last six months alone). According to the Commission, the company lured investors into a fraudulent Ponzi scheme by guaranteeing profits of over 36% per year, and at times promising to double investors' money within a year. The Commission's complaint, filed in federal district court in San Francisco, alleges that Chicago D&P fraudulently represented that it would use investor funds to acquire real estate that would generate "safe" and "phenomenal" returns. Instead, the company's founder and president, 57-year-old Emeryville, California resident Patricia "Pat" Morgen, diverted hundreds of thousands of dollars to personal use. According to the Commission's complaint, the defendants fooled investors into thinking the investment was profitable by making regular payments of supposed investment returns; in actuality, the money came from new investors. An order issued by Judge Charles R. Breyer Tuesday morning freezes all funds and assets controlled by Chicago D&P and Morgen, as well as those of Morgen's 27-year-old son Shalom Gibson, of Berkeley, California, who is alleged to have controlled various bank accounts into which Morgen siphoned investor funds. The Commission reported to the court that, immediately after receiving subpoenas from the Commission over the weekend, Gibson and Morgen attempted to withdraw $300,000 of investors' funds in cash and cashier's checks, a move blocked by the court order. Based on the evidence presented by the Commission, the Court issued an order temporarily freezing all of Chicago D&P's, Morgen's, and Gibson's funds and providing other emergency relief. The Commission's complaint charges the defendants with violating the antifraud and registration provisions of the federal securities laws, specifically Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The Complaint seeks permanent injunctions prohibiting future violations of the securities laws, disgorgement, and civil penalties. Also named as a relief defendant is Realtopia, Inc., an entity controlled by Gibson into which he allegedly diverted investor funds. SEC Complaint in this matter
The Securities and Exchange Commission today announced that it has obtained an order freezing the assets of Chicago D&P, Inc., a purported real estate company based in Emeryville, California (with offices in Reno, Nevada) that has raised millions of dollars from hundreds of investors nationwide since 2001 (including over $6 million in the last six months alone). According to the Commission, the company lured investors into a fraudulent Ponzi scheme by guaranteeing profits of over 36% per year, and at times promising to double investors' money within a year. The Commission's complaint, filed in federal district court in San Francisco, alleges that Chicago D&P fraudulently represented that it would use investor funds to acquire real estate that would generate "safe" and "phenomenal" returns. Instead, the company's founder and president, 57-year-old Emeryville, California resident Patricia "Pat" Morgen, diverted hundreds of thousands of dollars to personal use. According to the Commission's complaint, the defendants fooled investors into thinking the investment was profitable by making regular payments of supposed investment returns; in actuality, the money came from new investors. An order issued by Judge Charles R. Breyer Tuesday morning freezes all funds and assets controlled by Chicago D&P and Morgen, as well as those of Morgen's 27-year-old son Shalom Gibson, of Berkeley, California, who is alleged to have controlled various bank accounts into which Morgen siphoned investor funds. The Commission reported to the court that, immediately after receiving subpoenas from the Commission over the weekend, Gibson and Morgen attempted to withdraw $300,000 of investors' funds in cash and cashier's checks, a move blocked by the court order. Based on the evidence presented by the Commission, the Court issued an order temporarily freezing all of Chicago D&P's, Morgen's, and Gibson's funds and providing other emergency relief. The Commission's complaint charges the defendants with violating the antifraud and registration provisions of the federal securities laws, specifically Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The Complaint seeks permanent injunctions prohibiting future violations of the securities laws, disgorgement, and civil penalties. Also named as a relief defendant is Realtopia, Inc., an entity controlled by Gibson into which he allegedly diverted investor funds. SEC Complaint in this matter