A manager of an alternative asset management firm and his companies have settled with the Securities and Exchange Commission on charges of misusing investors’ money for personal use, as reported by sister publication pfm. But a federal case is pursuing criminal charges against him.
Todd Hitt was accused of violating securities laws by using two of his companies – Kiddar Capital and Kiddar Group Holdings – in misappropriating “several million dollars of investor funds to support his extravagant lifestyle and make Ponzi-like payments to prior investors,” according to the SEC. Kiddar Capital is based in Falls Church, Virginia and invests in private equity and other asset classes including real estate, infrastructure and debt.
Over a four-year period from 2014, Hitt raised $20 million from at least 29 investors to invest in an office building along the Washington, DC-area metro line, construction projects for new homes in northern Virginia and a start-up technology venture, the SEC said in its complaint.
After being charged, Hitt reached a settlement with the SEC in which he agreed to allow his assets to be frozen. He is also prohibited from participating in deals with real estate development companies.
The settlement includes the appointment of a receiver – someone chosen by the court to manage the firm, as well as to “prevent asset dissipation and loss,” the SEC said.
Kiddar Capital’s website reads: “Our website is currently down for maintenance.” Calls to the firm’s office went unanswered.
“We moved quickly to preserve the value of investors’ stake in a number of commercial and residential properties in northern Virginia,” said Melissa Hodgman, associate director of the SEC’s Division of Enforcement. “The total package of relief obtained in the settlement ensures that Hitt’s assets will be used to compensate harmed investors and will limit his ability to harm investors in the future.”
Though Hitt has settled with the SEC, he still faces criminal charges from the US government. He surrendered to the FBI on Friday, and the US Attorney’s Office in the Eastern District of Virginia is prosecuting the case. He faces a maximum penalty of 20 years imprisonment for securities fraud.
The district attorney alleged in its complaint that Hitt raised more than $16 million from investors by misrepresenting that he “would invest $6 million as a general partner as part of a planned $33 million purchase of a Herndon building adjacent to a future stop on the Silver Line of the Washington, DC Metro.” His extravagant spending allegedly included the leasing of private jets and the purchase of sports tickets and jewelry.