California Real Estate Fraud Report

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Archive for the 'Ponzi Schemes' Category

Clovis Man Charged with Operating a Ponzi Scheme

July 13th, 2017 at 7:41am

Clovis resident Seth Adam Depiano, 36, has been arrested Thursday and has been charged with mail fraud, wire fraud and money laundering.

In court document, Deplane is accused of operating a $20 million Ponzi scheme by luring unsuspecting real estate investors into his businesses, including The Rental Group, U.S. Funding and Home Services LLC and Draymond Homes.

He promised the investors that their funds would be used to purchase homes that would either be renovated and resold or turned into rental properties.

In addition, Depiano is accused selling the North Roosevelt apartment building in Fresno that he didn’t owned to his investors. Another complex in Fresno, the “Winery Complex,” was sold as an apartment building but is actually condominium units that are individually owned.

The FBI investigation began in September 2015 after a notary filed a report with the Los Gatos Police Department, claiming her signature had been forged (notary fraud) on a grant deed document for the North Roosevelt complex.

Seth Depiano’s case is being heard before the U.S. District Court in Las Vegas, the city in which he was arrested.

Read the original article in the Fresno Business Journal.

Lake Forest Woman Pleads Guilty to Ponzi Scheme in Real Estate Fraud Case

January 27th, 2017 at 10:02am

Fifty-five-year-old Angel Bronsgeest woman has pleaded guilty to federal charges of operating a real estate scam that resulted in Southern California investors losing $3.5 million, according to the U.S. Attorney’s Office for the Central District of California.

Bronsgeest pleaded guilty to one count of wire fraud, said the U.S. Attorney’s Office, admitting that she and Shawn Patrick Watkins solicited their victims at Orange County hotel seminars to invest in their company, called The Equity Growth Group, or TEEG. Their pitch was that TEEG managed hundreds of property and the rents they collected were used to purchase new properties. Investors could earn interest on their money, which was secured by the deeds of trust on the properties. But the U.S. Attorney’s Office said that TEEG was not acquiring new properties, had a negative cash flow and the investors who did receive “interest” payments received that money from funds Bronsgeest and Watkins solicited by new victims (Ponzi scheme).

Read the original article in the OC Register.

Read the press release by clicking on this link for the U.S. Attorney’s Office for the Central District of California.

 

Co-Founder of Pacific Property Assets Gets Light Sentence Due to Minor Child

April 29th, 2016 at 1:16pm

John Packard is a convicted felon who caught a lucky break.

Packard, 66, is the co-founder of Irvine-based Pacific Property Assets, along with his former partner, CEO Michael J. Stewart, 68. In exchange for testifying against Stewart in a case in which prosecutors alleged that about 650 mostly elderly investors lost a total of $169 million in savings and retirement funds when PPA declared bankruptcy, Packard received only 2 1/2 years, whereas Stewart was sentenced to 14 years.

Packard’s luck is that he and his ex-wife, who is serving a life sentence for contracting the murder of her wealthy boyfriend William McLaughlin, have a 16-year old daughter. U.S. District Judge Cormac J. Carney granted the lenient sentence to Packard for his cooperation and lesser culpability than Stewart.

Read the original article in the Orange County Register.

San Clemente Man Ordered to Repay over $9 million to Investors in Ponzi Scheme

March 11th, 2016 at 11:46am

The former owner of a bankrupt Orange County real estate investment firm was sentenced to 168 months in prison for operating a Ponzi scheme that cost his investors $169 million.

San Clemente-based Michael J. Stewart, 68, was also ordered Monday by U.S. District Judge Cormac J. Carney to pay $9,234,914 restitution to 120 victims in connection with his conviction on 11 counts of mail fraud in August 2015.

Stewart’s firm was Pacific Property Assets. Its business, which had offices in Long Beach and Irvine, raised money by refinancing and selling properties, according to U.S. Attorney Eileen M. Decker.

Stewart and his co-defendant John Packard used new money they raised to pay earlier investors.

Read the original article in MyNewsLA.com.

 

Al Moriarty Our of Jail, Denies He Defrauded Victims in Ponzi Scheme

February 5th, 2016 at 9:06am

Former Grover Beach financier Al Moriarty, 82, is out of jail after pleading no contest to seven felony fraud charges in August 2014. Prosecutors accused the owner of Moriarty Enterprises of operating a Ponzi scheme that promised his victims he would invest their funds in gold and real estate, yet the money ended up in his personal bank account.

Losses to the 170 individual investors totaled over $10 million.

Read the original article in the San Luis Obispo Tribune.

Newport Beach Man Convicted in Real Estate Fraud Ponzi Scheme

January 29th, 2016 at 11:42am

Thomas Franklin Tarbutton, 56, of Newport Beach, has been convicted of almost 40 felony counts, after being tried for grand theft and securities fraud. The 11 victims lost over $3 million, according to Senior Deputy District Attorney Pete Pierce of the Orange County District Attorney’s Office.

Tarbutton operated Irvine-based Villa Capital Inc. from 2004-2010 and funded private loans using monies he received from investors. He fled to Panama but was extradited to Orange County in December 2013.

Read the original article in The Patch.

Lender for Kelly Gearhart gets 7 years for role in the Ponzi scheme

October 22nd, 2015 at 3:10pm

James Hurst Miller, 67, a North County lender who was a middleman for developer Kelly Gearhart, has been sentenced to seven years in federal prison for his participation in the Ponzi scheme that defrauded hundreds of area investors, according to the U.S. Attorney’s Office for the Central District of California.

Miller had agreed to testify against Gearhart, who was sentenced to 14 years in federal prison last July.

Gearhart was a prominent developer and former Atascadero Citizen of the Year who began committing fraud in 2004, according to the U.S. Attorney’s Office. Miller helped Gearhart raise money from investors with his firm, Hurst Financial Corp. for large developments, such as Vista Del Hombre, a Paso Robles golf course. Eventually, both men misused the investors’ money, spending it on themselves.

Read the original article in the San Luis Obispo Tribune.

There are many earlier postings about this case that you can find by searching the California Real Estate Fraud Report.

 

Marin County mortgage broker sentenced to prison in $2.4 million Ponzi scheme

October 9th, 2015 at 12:02pm

Paul Sloane Davis, 76, was sentenced by U.S. District Judge Charles Breyer to three years in prison for his participation in a $2.4 millon Ponzi scheme. Judge Breyer also ordered him to pay $1.7 million in restitution to Davis’ victims.

Davis and a partner, Diane Cobb, 58, formerly ran a financial services company in Novato called DM Financial. The 2013 grand jury indictment accused them of soliciting investment money to be used for short-term bridge loans. Prosecutors alleged that the monies the pair received was used to either pay back previous investors or to support a lifestyle of expensive restaurant meals and travels. The victims who unwittingly supported the Ponzi scheme, which ran from 2009 to 2013, did so with their retirement funds or childrens’ college funds.

Diane Cobb previously pleaded guilty to the same charges as Paul Davis and awaits her sentence in January 2016.

Read the original article in Marinscope Community Newspapers.
 

“Opportunity Fund” co-owner

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.

Ponzi scheme or real estate investment gone bad?

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.

 

© Copyright 2007-2018 Monique Bryher

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The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage fraud, short sale fraud, REO fraud, appraisal fraud, loan modification scams, loan modification fraud and other real estate related crimes occurring in Los Angeles and California. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about real estate fraud, mortgage fraud and appraisal fraud matters or who believe they require legal counsel should seek the advice of an attorney.

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