A Massachusetts subprime auto lender has been charged with fraud for allegedly collecting $110 million through the sales of unregistered securities notes.
According to a Securities and Exchange Commission complaint, Massachusetts-based Inofin Inc. and three of the company's executives raised the funds from hundreds of investors in 25 states and the District of Columbia through the sale of unregistered notes. Investors were told that Inofin would use the money for the sole purpose of funding subprime auto loans.
As part of the pitch, Inofin told investors that they could expect to receive returns of 9% to 15% because the company loaned investor money to its subprime borrowers at an average rate of 20%. The SEC said unbeknownst to investors, one-third of the $110 million raised was used to open four used car dealerships and begin multiple real estate property developments for their own benefit. The commission said Inofin is not registered with the SEC to offer securities to investors.
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