Former CEO of Real Estate Private Equity Firm Charged with Securities Fraud

/ Press Releases / / By
Department of Justice

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the arrest of ERIC MALLEY, the founder and former chief executive officer of real estate private equity investment firm MG Capital Management L.P.  on charges of securities fraud and wire fraud for his role in a scheme to fraudulently induce hundreds of individuals to invest a total of more than $50 million in two real estate investment funds by, among other things, lying about his own prior experience and investment track record and about the nature and characteristics of those funds.  MALLEY was arrested this morning in New Canaan, Connecticut, on a criminal complaint (the “Complaint”) and will be presented before a magistrate judge in the Southern District of New York.

Acting Manhattan U.S. Attorney Audrey Strauss said:  “Eric Malley allegedly promised his clients that they would reap the benefits of owning equity in Manhattan real estate through his time-tested, sophisticated, debt-free investment strategy.  As alleged, those promises were lies.  Malley lied about his prior funds’ existence and performance, and he lied in promising clients that the funds were free of debt and leased to prominent corporate tenants.  While his investors lost money, Malley enriched himself.  We will continue to work with our law enforcement partners to protect investors from these types of deceptive practices.”

FBI Assistant Director William F. Sweeney Jr. said:  “As alleged, Malley, acting as CEO of an investment firm he founded, solicited investors with material misrepresentations and lies pertaining to luxury residential real estate and several investment funds.  Ultimately, the investors, many of whom had entrusted Malley with all of their retirement savings, lost nearly everything.  Today’s action should serve as a reminder to fraudsters who seek to prey on unwitting investors that the FBI and our partners will not waver in our commitment to bring them to justice.”

As alleged in the Complaint unsealed today in Manhattan federal Court[1]:

MALLEY founded MG Capital Management L.P. (“MG Capital”) in approximately January 2013, and served as its chief executive officer (“CEO”) from that time until approximately December 2019.  MALLEY described MG Capital as an opportunity for investors to invest in luxury residential real estate properties through limited partnership interests, and formed two real estate investment funds, MG Capital Management Residential Fund III (“Fund III”) and MG Capital Management Residential Fund IV (“Fund IV”) (collectively, “the Funds”), in approximately February 2014 and September 2017, respectively.

In connection with marketing the Funds to investors, MALLEY touted two purportedly extremely successful prior funds he had formed, Fund I and Fund II.  MALLEY also assured investors that the Funds would be and were debt-free, and that the properties held by the Funds would be and were leased primarily to corporate tenants.  MALLEY’s representations about the existence and performance of Funds I and II were largely fabricated.  Furthermore, the Funds were not debt-free, but instead held mortgaged properties, and the properties that made up the Funds were almost entirely leased to individual, not corporate, tenants.

Investors in the Funds, many of whom invested the entirety of their retirement savings, lost all or almost all of their investments.  As to Fund III, in total, approximately 60 investors invested approximately $23 million.  Fund III incurred net operating losses of approximately $860,000, and its investors never received either distributions or a return of their investments.  MALLEY nevertheless distributed at least approximately $278,000 to himself in his capacity as general partner.  As to Fund IV, in total, approximately 275 investors invested approximately $35 million.  Fund IV incurred millions of dollars in losses, and MALLEY did not disclose those losses until approximately two years into Fund IV’s operation.

In or about mid-December 2019, MALLEY stepped down from his role as CEO of MG Capital.  Between in or about February 2020 and on or about March 31, 2020 – after MALLEY had become aware that the U.S. Securities and Exchange Commission (“SEC”) was investigating him – MALLEY accessed MG Capital’s server and deleted approximately 10,000 files from the server, including broker information and closing documents detailing the closing costs associated with acquisition of properties, which were used to obtain funding from the Funds’ administrators.

*                *                *

MALLEY, 50, of New Canaan, Connecticut, is charged with one count of securities fraud, which carries a maximum potential sentence of 20 years in prison, and one count of wire fraud, which carries a maximum potential sentence of 20 years in prison.  The maximum potential penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Ms. Strauss praised the investigative work of the FBI and thanked the New York Regional Office of the U.S. Securities and Exchange Commission, which has separately filed a civil action against MALLEY and M.G. Capital Management.

This case is being handled by the Office’s Securities and Commodities Task Force.  Assistant United States Attorney Elizabeth A. Hanft is in charge of the prosecution.

The allegations contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

___________________________________________

[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth below constitute only allegations, and every fact described should be treated as an allegation.

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Bracewell Adds Renewable Energy Trio in London

/ Press Releases, UK Law / January 13, 2021 / By
Solarenergy lawfuel

LONDON, Jan. 11, 2021 /PRNewswire/ — Bracewell (UK) LLP announced today that Tom Jamieson, Jo En Low and Gordon Stewart have joined the London office as partners in the firm’s global energy practice. The trio joins Bracewell from Clifford Chance LLP, where they spent the last decade working together as an established cross-practice team advising clients on renewable energy and power transactions across Africa, the Middle East and Europe.

“I’m excited to welcome this dynamic team to the firm,” said Bracewell Managing Partner Gregory M. Bopp. “Their diverse experience on market-leading renewable energy projects and transactions strengthens our ability to serve the needs of our energy clients throughout the world.”

Jamieson brings extensive project development and finance experience to the firm, with a focus on power, energy transition and low carbon projects. He advises developers, financial investors, banks and multilaterals on all aspects of the project cycle, from structuring and negotiating the commercial contracts through to financing, refinancing and divesting relevant assets. Jamieson is a graduate of University of St. Andrews.

Low is an M&A/private equity lawyer with a focus on advising private equity and other financial investors as well as fund-owned businesses on renewable energy transactions. She advises on the establishment of fund-owned renewable energy platforms, joint venture/consortium arrangements, management incentive arrangements, and the corporate structuring and development of renewable energy projects, as well as the acquisition and disposal of fund-owned portfolios of renewable energy assets. Low is a graduate of the University of New South Wales and Columbia Law School.

Stewart is an energy infrastructure lawyer with a focus on advising financial investors, private equity houses, and corporates and their banks and funders on renewable energy and power transactions. He has worked on several first of their kind transactions, advising clients on their acquisitions, joint development arrangements and financing of renewable and low carbon assets, as well as related energy infrastructure. Stewart is a graduate of St. Catharine’s College, University of Cambridge.

“Bracewell’s London office has established itself as one of a very small group of leading firms in the oil and gas sector. Tom, Jo En and Gordon have different but complimentary practices. With their addition to our already well established renewable energy team, we now have depth on the renewable energy side that is the equal of any firm in this market,” said Jason Fox, managing partner of Bracewell’s London office.

With one of the largest dedicated energy teams in the world, Bracewell is strongly positioned to advise client on opportunities in the renewable energy space, including in Africa and other emerging markets. The firm recently represented an international investment consortium, comprised of Siraj Energy, Marubeni Corporation and Total Solar, on the development and implementation of the first utility-scale renewables independent power project in Qatar; Fotowatio Renewable Ventures in the first utility-scale renewables project in Armenia and its second utility-scale battery project in the UK; Eni is its acquisition of a 20 percent interest in the world’s largest offshore wind farm project; and Equinor as US counsel in the $1.1 billion agreement to sell BP a 50 percent interest in the Empire Wind and Beacon Wind projects off the US East Coast.

“The evolving industry requires advisers who are nimble, creative and efficient, thereby maximizing value and certainty for clients,” said Jamieson.

“We wish to build a business focused entirely on our clients, partnering with them to develop and deliver on their long-term strategic objectives,” added Low.

“It is inspiring to be joining an entrepreneurial firm that shares our clients’ optimism and enthusiasm to pursue the opportunities presented by the energy transition,” Stewart also added.

Bracewell has significantly expanded its global energy team within the last 12 months, including in renewable energy. In addition to Jamieson, Low and Stewart, other recent additions to the firm’s renewable energy practice include Danielle Garbien and Martha Kammoun in New York, and Don J. Lonczak, Timothy J. Urban and Danielle M. Varnell in Washington, DC. Alistair Calvert joined the London office in November as a partner in the firm’s international energy disputes practice. Bracewell also expanded its energy offering in Dubai with Andrej Kormuth, who joined the firm from Clifford Chance, and Clint Steyn, who rejoined the firm from Alcazar Energy.

About Bracewell LLP

Bracewell is a leading law and government relations firm primarily serving the energy, infrastructure, finance and technology industries throughout the world. Our industry focus results in comprehensive state-of-the-art knowledge of the commercial, legal and governmental challenges faced by our clients and enables us to provide innovative solutions to facilitate transactions and resolve disputes.

Bracewell occupies a singular position in the UK market, as the only international law firm dedicated exclusively to the energy industry. For three years in a row, The Times has recognized Bracewell as one of the top 20 energy and renewables firms in the UK.

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