STAMFORD, Conn. -- Carlton P. Cabot, a resident of Stamford and former chief executive officer of Cabot Investment Properties LLC (CIP), and a colleague were arrested in connection with a scheme to defraud investors by misappropriating more than $17 million to pay for personal and business expenses.
Cabot and Timothy Kroll, of New Hope, Pa., the former chief operating officer of the firn, were arrested on Wednesday.
“As alleged, Carlton Cabot and Timothy Kroll conspired to defraud investors out of millions of dollars by misappropriating investor funds, in part to pay for personal luxuries, and they falsified financial statements in an attempt to cover their tracks. The investigative work of the Postal Inspection Service and the IRS put an end to the alleged scheme,” said Preet Bharara, the U.S. attorney for the Southern District of New York.
The two men were accused of engaging in a scheme to defraud investors who own a piece of commercial real estate and are entitled to receive a portion of the rental income from the property, by misappropriating the funds belonging to the investments and concealing their misappropriations by providing false and misleading financial report and other information to the investors.
According to the Justice Department, Cabot and Kroll reportedly used the funds to pay for millions of dollars of personal expenses, including expensive cars, rental apartments, and private school tuition.
The men were each charged with conspiracy to commit securities fraud; conspiracy to commit wire fraud; conspiracy to commit money laundering; securities fraud; wire fraud; money laundering' and illegal monetary transactions, according to the Justice Department.
All seven charges carry anywhere between five and 20 years in prison.
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