Gerald Lee Kelly, 48, Gilbert, Arizona, was sentenced to 27 months in federal prison for his role in an investment scheme. Kelly pleaded guilty on May 14, 2012, to wire fraud, transactional money laundering, and structuring financial transactions through a domestic financial institution.
Kelly admitted as part of his guilty plea that he operated a business called Cornerstone Financial Holdings, LLC, and solicited funds from investors to purportedly make loans to individual homeowners in need of financing secured by second deeds of trust or some variation of a security instrument. Kelly also admitted that he falsely represented to several lender/investor victims that they would typically earn a return of 18-25% on their principal, that some would receive monthly payments for a fixed period of time and that they would be repaid their principal when the homeowner-borrowers obtained refinancing or sold their homes.
Kelly admitted that Cornerstone‘s loan program was not generating sufficient income to pay the rate of return, make promised payments or repay principal as represented causing the victims in the case to lose approximately $855,000. The Court ordered Kelly to pay restitution of $915,028.33 to 11 victims.
The investigation in this case was conducted by Internal Revenue Service Criminal Investigation, the Federal Bureau of Investigation and the United States Trustee’s Office.