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Judge Freezes Assets of 2 Firms

November 10, 2005|Josh Friedman | Times Staff Writer

A federal judge on Wednesday halted the operations of two Southern California real estate investment companies that regulators said had defrauded investors of at least $10 million.

At the request of the Securities and Exchange Commission, U.S. District Judge Cormac J. Carney in Santa Ana issued a temporary restraining order against Edward R. Showalter, 53, of San Clemente and two companies he controls, High Park Investment Group Inc. in Gardena and Harbor Financial Investment Group Inc. in Huntington Beach.

The judge also froze Showalter's assets and those of his companies and appointed a temporary receiver for the firms.

Calls to Showalter's attorney were not returned.

The SEC said that since December 2003, Showalter had raised funds from more than 100 people nationwide who responded to ads in The Times and the Orange County Register and on his website. The ads solicited investments of $50,000 or more in "distressed" residential property in Southern California and Arizona that supposedly would be bought, fixed up and resold.

According to the complaint, investors were promised guaranteed monthly returns, but those payments stopped in July or earlier, if they were made at all.

Investors also were told that their money would be used for specific properties, when in fact the funds were commingled, and that investments were secured through trust deeds, when those deeds either were never recorded or were "over-encumbered," the SEC said.

Showalter misappropriated at least $1.8 million in investor funds, said Michele Wein Layne, assistant regional director of the SEC's Los Angeles office. She could not say how much money was being frozen.

Showalter had been sued in 1998 over a similar operation. A default judgment was entered against him in 2001, and he was ordered to pay more than $900,000 in penalties and restitution, the SEC said.

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