August 28th, 2015 at 9:18am
William Yotty, a self-proclaimed real estate investor of foreclosed homes that he “flipped” has pleaded guilty to mail fraud and wire fraud, both federal felonies.
Yotty lured his 240 investors by promising, through his former company Fortuno Inc., insane profits. A brochure distributed by Fortuno claimed it could show the investors “how to take $400 and turn it into $25,000 in the next 30 days.” The investors, who in total lost $14 million, said instead that Yotty purchased the foreclosed homes by himself and resold them to the investors at inflated prices.
The case was prosecuted the U.S. Attorney’s Office for the Central District of California.
Read the press release on the U.S. Attorney’s website.
August 17th, 2015 at 10:02am
The jury hearing the prosecution of the co-owner of a former real estate firm was convicted of operating a Ponzi scheme that cost the investors up to $169 million.
Michael J. Stewart, 68, the partner of co-defendant John Packard, was found guilty of 11 counts of mail fraud. U.S. District Judge Cormac Carney granted a motion by federal prosecutors to dismiss charges related to bank and bankruptcy fraud.
John Packard pleaded guilty in the same case in November 2014 and is awaiting his sentence.
Stewart and Packard ran Pacific Property Assets, which had offices in Long Beach and Irvine. Their business model, called the Opportunity Fund, was buying and flipping distressed apartment buildings. They lured investors by telling them they could earn 15-30% interest per month when former homeowners needed to rent apartments after their houses were foreclosed.
The case was prosecuted by Assistant U.S. Attorney Joshua Robbins.
Read the original article in the Press-Telegram.
July 29th, 2015 at 5:19pm
Just a few short months after soliciting investors by mail, the CEO of Pacific Property Assets (PPA) in Irvine filed bankruptcy.
Now, Michael J. Stewart is standing trial on 11 counts of fraud after his “Opportunity Fund,” which took in $91 million from 650 investors collapsed. Investors were lured in by mailers telling them their money would be used to acquire apartment buildings a bit over half their replacement costs.
Stewart, 68, argued that PPA failed as a result of the housing and economic recession, but prosecutors say otherwise, saying PPA made money from the appreciation of the 50 apartment buildings it owned in Long Beach, Riverside and Arizona, which it refinanced. When the economy stalled in 2008, lenders stopped refinancing and, according to U.S. Attorney Joshua Robbins, the company turned to funding by individual investors, whose money was used to pay back previous investors, as well as salaries and expenses for Stewart and John J. Packard, 65, his partner.
The lenders lost about $24 million when the apartment buildings defaulted on the mortgages.
Read the original article in the Orange County Register.
July 9th, 2015 at 9:47am
Beverly McFarland, the trustee handling the bankruptcy of IMG, Inc., is suing two of the local real estate developers who lost money in the Ponzi scheme for which IMG’s principal Deepal Wannakuwatte was imprisoned.
McFarland’s view is contrary to authorities, who say Jack Sweigart and Larry Carter were among the 100 investors who lost $150 million in the fraud by Wannakuwatte, who is serving 20 years in prison. She claims that Sweigart and Carter “knew or at least should have known” of the fraud and is seeking a court order forcing them to return some of the monies they received from IMG, whose business was selling surgical gloves to the U.S. government.
July 9th, 2015 at 8:44am
Inexplicably, a jury that awarded ex-fighting champ Chuck Liddell and Usman Iqbal and Umer Iqbal damages against Cuesta Title, Stewart Title of California and Stewart Title Guaranty for their roles in the Kelly Gearhart Ponzi scheme, refused to award damages against five other plaintiffs.
Kelly Gearhart was a developer who raised millions for his projects in the Central Coast but who also diverted millions for his private use and to repay previous investors. Although he pleaded guilty to money laundering and wire fraud and received a sentence of 14 years in prison, he has now decided to appeal his guilty plea, according to CalCoastNews.
The jury apparently made its decision based on the close relationship between Kelly Gearhart, his wife and Melanie Schneider, an escrow officer of Cuesta Title. Schneider was not only friends with the Gearharts and traveled with them, she lived in their guest house and dated Gearhart’s brother. The jury said that the Iqbal brothers had introduced Chuck Liddell to Gearhart and that an unnamed Cuesta Title employee helped Gearhart commit fraud against the Iqbals. They jury saw no such connection with respect to the remaining five plaintiffs.
Read the original article in the Tribune.
July 3rd, 2015 at 5:13am
Once honored as an Atascadero “Citizen of the Year,” real estate developer Kelly Gearhart, 53, was sentenced to the maximum 14 years in prison for defrauding investors who lost over $15 million on his development projects.
Federal Los Angeles Judge Otis Wright imposed a harsher sentence than the government had requested for Gearhart, who pleaded guilty last year to wire fraud and money laundering. The judge noted that many were elderly investors who had lost everything due to Gearhart’s “sheer greed.”
In his plea agreement with prosecutors, Gearhart admitted selling the same lots to multiple investors doing the same to get bank financing.
Read the original story in the San Luis Obispo Tribune.
May 22nd, 2015 at 8:54am
A Modesto who pleaded guilty to stealing over $1 million from investors in California and Texas has been arrested and charged with two felony counts of grand theft.
In the newest case, Xue Heu, 37, is accused of using the same tactics to scam another victim out of $6,000.
“Xue Heu defies the court order and continues to defraud victims,” wrote Glenn Gulley, an investigator with the district attorney’s real estate fraud unit in a document filed in Stanislaus Superior Court.
May 22nd, 2015 at 7:55am
Former fighting champion Chuck Liddell is suing Cuesta Title Company, Stewart Title of California and Stewart Title Guaranty for the losses he suffered in the failed $24 million golf course development known as Vista del Hombre.
Liddell’s friend Kelly Gearhart, the developer of the project and a former Atascadero Citizen of the Year, is awaiting sentencing on federal fraud charges June 1. Because he filed bankruptcy, 500 of the investors are suing the title companies, claiming they were part of Gearhart’s Ponzi scheme.
Defense counsel for Cuesta Title is claiming that it knew nothing about the fraud or Ponzi scheme orchestrated by Gearhart and that it did its job as an escrow company.
Read the original article in The Tribune.
Note: there are many earlier articles about Kelly Gearhart, which you can find by searching this blog.
April 23rd, 2015 at 3:14pm
Sixty-year-old Benny Chetcuti Jr. has been sentenced to more than four years in prison for operating a real estate investment fraud scheme. He must also pay over $21.8 million in restitution for the losses he caused.
Chetcuti convinced investors to loan money to his firm, Chetcuti & Associates, telling them their investments were backed by properties. Although the firm’s business was to buy, renovate and re-sell homes (“flipping”), he did so by forging deeds purportedly written by lenders and title company officers.
Read the original article in the Contra Costa Times and the office of U.S. Attorney Melinda Haag.
April 22nd, 2015 at 7:26am
Modesto resident Kenneth Manuel Martin, 66, pleaded guilty to one count of wire fraud.
According to the offices of United States Attorney Benjamin B. Wagner, Martin convinced individuals to invest money with him, telling them their monies would be used to fund mortgage loans to home buyers in Guatemala. Their investments were to be secured by grant deeds secured by Guatemalan real estate. The inducement was high interest rates of return.
This case was investigated jointly by the Federal Bureau of Investigation and the Social Security Administration, Office of Inspector General. Assistant United States Attorneys Henry Z. Carbajal III and Grant B. Rabenn are prosecuting the case.
Read the original article in the Imperial Valley News.