California Real Estate Fraud Report

After pleading guilty to 112 felony counts, 68 year old Joseph Anthony Veltre was sentenced to 18 years in prison for running a Ponzi scheme that fleeced investors, many of them elderly, out of $2.6 million. He was ordered to repay that same sum in restitution.

Veltre ran his Ponzi scheme out of Sea View Financial and Allied Corporate Investments. He made hard money loans to borrowers wanting to take out second and third mortgages and promised high rates of return to his investors.

Read the full article in the OC Register.

The U.S. Department of Justice has indicted eight Californians for real estate fraud, including Ken Sarna of Vallejo.

Sarna and the other defendants were charged with committing wire and mail fraud in connection with a real estate investment fraud scheme that ultimately resulted in losses of more than $11.4 million to the victims. The company where the alleged fraud occured was called Heaven Investments Holding Co., of which Ken Sarna was the director of operations. Heaven Investments filed for bankruptcy in 2008, was liquidated in 2009 and appears to have been little more than a Ponzi scheme.

Others charged in the indictment are:

Akbar Bhamani, 56, of Carmichael, CEO, Heaven Investments
Aly Khan Bhamani, 28, of Carmichael, Vice President, Heaven Investments
Zainulabidin Akbar Bhamani, 30, of Sherman Oaks, Vice President, Heaven Investments
Laila Bhamani, 57, of Tracy, Finance Department, Heaven Investments
Feroza Bhamani, 55, of Carmichael, Finance Department, Heaven Investments
John Pierre Quintana, 30, of Dixon, Director of Marketing, Heaven Investments
Shaun Bhamani, 26, of Valencia, Loan Officer, Global Financial & Assets Inc.

Read the full article in the Vallejo Times-Herald written by Rachel Raskin-Zrihen. See also the article published in 7th Space Interactive.

In a case that allegedly includes victims in four states as well as overseas, two men have been charged with stealing $200 million in a real estate fraud that targeted Orthodox Jews.

Eliyahu Weinstein of New Jersey and Vladimir Siforov of New York represented themselves as real estate investors. Their angle was to seek out victims in various Orthodox Jewish communities whose customs and social structure were familiar to Weinstein and Siforov. New Jersey, New York, Florida and California were the U.S. states in which the victims lived. Instead of investing their money, Weinstein used it to purchase  art, jewelry and Judaica. According to the prosecutors from the U.S. Attorney’s office in Newark, Weinstein’s collection includes manuscripts and antique Judaica items valued at $6.2 million; a jewelry and clock collection that cost $7.6 million; and jewelry and watches worth $6.2 million.

Read the full article in the Wall Street Journal.

The San Joaquin County D.A.’s Office has completed a three year investigation into a Tracy, California brokerage, resulting in the arrests of the firm’s chief executive and a second person.

Ward Real Estate Brokerage & Foreclosure Services Inc., no longer in business, was the focus of multiple complaints. Authorities believe $4.5 million was stolen from investors through a house-flipping scheme that promised high returns but failed when the real estate market turned sour.

Leesa Marie Ward, 45, of Lodi, was arraigned on a 46-count felony indictment by a criminal grand jury, which charged her with tax evasion, grand theft and securities fraud. Alison Ann Jensen, 45, of Pleasanton turned herself in and was booked on identical charges. Bail for each licensed real estate broker is set at $3 million. Jensen’s broker’s license has expired, but Ward’s is still active with the California DRE.

Some of the victim’s of this alleged investment scam were elderly.

Read the full article in RecordNet.com

Lodi-based Fortuno Inc. is the target of a lawsuit who claim the firm defrauded them out of $1 million by telling them that homes Fortuno bought could be resold easily to make a profit when in reality the homes were either condemned or in need of expensive repairs.

The lawsuit, filed in Los Angeles County Superior Court by Andrew Wyatt, alleges, among other charges, that the promoters stated investors would earn 14 - 17 percent annual returns from the homes in Michigan and Ohio. Wyatt further alleges that while the investors lost all of their money, the defendants earned at least 400 percent by selling the properties to the investors.

Also named in the lawsuit were the Real Estate Investors Club of Los Angeles, Sognari International Inc., National Realty Inc. and the officials who ran those business. Phyllis Rockower is the owner of the Real Estate Investors Club of Los Angeles, which earns fees from presenting various investing opportunities to its investors, mostly individuals or couples, in monthly meetings.

William “Bill” Yotty and Barbara Thomas, the owner and senior VP of operations for Fortuno, respectively, were part of PayStar Communications in the early 2000s, which was also sued successfully by investors with similar complaints.  According to Layla Bohm, a writer for the Lodi News Sentinel, Fortuno is still an active business registered with the State of California.

Read the full article in the Lodi News Sentinel.

Gary Armitage, a former Headsburg investment advisor, will be standing trial on November 9 for 50 counts of financial fraud and burglary. He co-defendant, James Koenig, will also stand trial for 42 counts of the same charges.

Armitage and Koenig are accused of ripping off investors, many of them elderly, out of more than $200 million in a Ponzi scheme. Both men are currently on jail, unable to make their $5 million bails. They each have rejected offers of 25 and 20 years respectively in prison from prosecutors.

Read the full article in the Press Democrat.

A Long Beach man who perpetrated a Ponzi scheme that defrauded investors out of $33 million pleaded guilty in federal court to wire fraud.

Jon Weldon James operated companies in El Segundo under the names of J. W. James and Associates Inc. and the Cloaking Device Inc.  He had promised investors in meetings he held at restaurants that he would place their money in real estate investments. Instead, James “invested” in his wedding, purchasing a recording studio called On the Ball Entertainment but did little actual investing in real estate.

Read the full article on Southern California Public Radio.

James Delbert McConville, indicted along with five co-conspirators in May as ringleader in a real estate fraud at several condominium complexes, was arrested in Valley Acres, southwest of Bakersfield. The condos were located in Escondido, San Marcos and a 300-unit complex in Ridgecrest, north of the Antelope Valley. The indictment originated out of the East (San Francisco) Bay because McConville’s offices were located in Fremont.

McConville not only found straw buyers who were stupid enough to rent their good credit ratings to purchase the condos, he charged “marketing” fees that ranged upward of half the purchase price of the properties, all of which he later ceased making payments on and allowed to fall into foreclosure.

Read the full article in the San Diego Union Tribune.

Rollo Richard “Rick” Norton II is on his way to prison after being sentenced by U.S. District Judge Marilyn L. Huff to just 24 months for mail fraud. His partners-in-crime Scott Greer and Todd Johnson have pleaded guilty and are now awaiting their fates in front of Judge Huff.

Norton participated in a complex real estate fraud investment scheme in which $30 million of his investors’ life savings was used in numerous purchases and refinances in a San Diego condominium complex.

Read the full article in the San Diego Union Tribune.

A federal judge in San Francisco sentenced 63 year old Patricia Morgen to more than 15 years in prison for defrauding investors out of millions of dollars.

Morgen, who found Chicago Development and Planning, which had offices in Emeryville and Reno, was also ordered by U.S. District Court Judge Charles Breyer to make restitution of $9 million to her 400 victims, many of whom lost their life’s savings. The court-appointed receiver has only found about $620,000 from the ashes of Morgen’s company, as Morgen appeared to have operated a Ponzi scheme and spent the millions she stole on herself and some of her employees.

Read the full article in SF Gate, the San Francisco Chronicle.