One of two owners of Irvine-based Pacific Property Assets pleaded guilty in federal court to mail fraud in answer to charges by prosecutors that his once-legitimate business turned into a Ponzi scheme when the housing market collapsed.
John Packard, 64, of Long Beach could receive 20 years in prison when he is sentenced by U.S. District Judge Cormac Carney next May.
Packard co-owed Pacific Property Assets with Michael Stewart, of Phoenix, whose trial is set for April 2015.
Prosecutors allege that the business, which raised money to buy, renovate and re-sell apartment buildings in Southern California and Arizona, was initially legitimate and amassed a portfolio of over 100 buildings in a 10-year period. But when the real estate market reversed course in the mid-2000s, they turned to raising money from new investors in order to stay current on their loans to their first investors. At the time they filed for bankruptcy in 2009, they were in debt to banks for $100 million and another $91 million to almost 650 individual investors. The private investors lost all of their money but the banks only lost about 25% of their investment.
Read the original article in the Daily Pilot.