Todd Elliott Hitt, former CEO of Kiddar Capital LLC received a 6 ½ year prison sentence following his involvement in a real estate Ponzi scheme. According to the U.S. Department of Justice, Hitt exploited nearly 30 investors out of $20 million. He then used portions of the solicited funds to pay off his personal credit card debts and other investors in a Ponzi-like manner.
Defendant Pays Sizable Contributions for Restitution
Hitt, who plead guilty to securities fraud in February, was given a relatively lenient sentence due to his family’s sizable contributions towards paying restitution to victims even before charges were filed.
His family, who is well known in commercial construction and real estate development, has paid $20 million in restitution; a payment that is “unique and unprecedented” say prosecutors.
Prosecutors made a statement, “In the same token, the government firmly believes that no defendant should be allowed to purchase their way out of jail.” However, the 78-month sentence is slightly lower than sentencing guidelines would suggest partly because of his family’s efforts towards restitution. The other reasoning behind his sentencing was due to the government’s stance that in a majority of his schemes, Hitt did not act as an “investment advisor” which would have led to a stronger sentencing.
Family Settles Parallel SEC Suit
The family also agreed to give an additional $13.7 million to settle a parallel suit that was brought by the SEC to compensate victims and creditors as well.
In a civil action, the SEC found that Hitt had acted as an investment advisor in one instance, which cost investors $1 million. Since this was only a small part of the overall fraud, the Department of Justice found that it would be “disproportionate” to give a more severe sentence.
Court filings show that Hitt also agreed to be barred for life from working in the investment and securities industries. Hitt will receive credit for time already served and may be required to provide further restitution of an amount yet to be determined.
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