James Stanley Ward, 65, Delaware, Ohio; Edward George Locker, 36, Highland Heights, Ohio; and Richard Ferguson Tipton, 62, Palo Alto, California, pleaded guilty in federal court in San Francisco, Califonria, to conspiracy to commit mail and wire fraud in connection with a real estate investment scam. Ward and Locker entered their guilty pleas on December 6, 2011. Tipton entered his plea on December 7, 2011
In pleading guilty, the defendants admitted that they deceived investors in Mountain View, California-based private money lender Jim Ward & Associates, Inc. (JWA), and its successor, JSW Financial, Inc. (JSW). Using funds obtained from investors, the defendants, through JWA and JSW, arranged and serviced private money loans to borrowers who built single family homes. JWA and JSW offered investors the opportunity to invest in fractional interests in these loans and in the Blue Chip Realty Fund, LLC (Blue Chip) and Shoreline Investment Fund, LLC (Shoreline).
According to the defendants’ plea agreements, JWA and JSW generated and provided documents to investors that represented that Blue Chip and Shoreline made and invested in loans that were secured by deeds of trust on real property. However, the defendants knew that those representations were false, because JWA and JSW did not secure investments in Blue Chip and Shoreline.
Ward, Locker and Tipton were indicted by a federal grand jury on June 21, 2011, and charged with eighteen counts alleging conspiracy to commit mail and wire fraud, mail fraud, and wire fraud, in violation of 18 U.S.C. Sections 1349, 1341, and 1343. Under the terms of their plea agreements, Ward, Locker, and Tipton each pleaded guilty to conspiracy to commit mail and wire fraud.
Ward and Tipton initially appeared in federal court on July 21, 2011, and were released upon posting $100,000 unsecured bonds. Locker initially appeared on Aug. 9, 2011, and was also released on a $100,000 unsecured bond.
Ward, Locker and Tipton are currently scheduled to be sentenced before Judge William H. Alsup in San Francisco, pursuant to the following schedule: March 13, 2012 (Ward), June 5, 2012 (Locker), and June 26, 2012 (Tipton).
The maximum statutory penalty for conspiracy to commit mail and wire fraud in violation of 18 U.S.C. Section 1349 is twenty years imprisonment and a fine of $250,000, or twice the gross gain or loss, whichever is greater, plus restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. Â§ 3553.
United States Attorney Melinda Haag announced the guilty pleas.
Thomas E. Stevens is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Rawaty Yim. The prosecution is the result of a two-year investigation by the Federal Bureau of Investigation. The United States Attorney’s Office recognizes the valuable assistance of the San Francisco Regional Office of the Securities and Exchange Commission in this matter.