A former investment fund adviser from Centennial and his Greenwood Village-based real estate firms have agreed to pay $9.7 million to settle accusations that he misled investors.
Tom Vukota, who now lives in the Bahamas, founded Vukota Capital Management and VCM Global Asset Management in 2010. They acquired dozens of apartment buildings and hotels, including the Miramar Apartments and Stratford at Lowry buildings in Denver.
Vukota, 52, and his companies controlled each property through a fund and sold interests in the funds to investors. In 2021, Vukota and VCM had 14 such funds, each of which controlled one apartment building, according to the U.S. Securities and Exchange Commission.
Four of those funds owned properties in Colorado Springs — the Villages at Woodmen, the Chestnut Springs Apartments, Wind River Place and Residence at Austin Bluffs — that were among the best-performing in VCM’s portfolio. So, in February and March 2021, Vukota decided to buy out other investors’ shares in the funds, the SEC wrote Sept. 9.
“The buyout letters were misleading because they negligently omitted material facts, failing to provide a complete picture of the Colorado Springs funds,” according to the SEC.
Vukota allegedly hid the fact that he was the person buying the interests and that each fund was about to receive millions of dollars in profits, and falsely claimed the apartments were losing money. Investors reportedly were not shown glowing appraisals of the buildings.
“From the above course of conduct, Vukota received approximately $5.6 million of ill-gotten proceeds” by purchasing investors’ interests at low prices, according to the SEC.
The federal agency sued Vukota, Vukota Capital Management and VCM Global Management last week for allegedly violating investment adviser and security laws. In addition to the buyout scheme, Vukota also caused the funds to lend money to VCM at below-market rates without telling investors and falsely claimed his funds had been audited, the SEC alleged.
The commission filed its lawsuit upon reaching a settlement with Vukota. Under the deal, he and his firm did not admit wrongdoing but agreed to pay $9.7 million to the government.
A lawyer for Vukota, Sam Lieberman at the Sadis firm in New York, declined to comment.
This story was originally published by BusinessDen.
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