California Man Indicted for Perpetrating Ponzi Scheme

Allison Tussey —  September 21, 2010 — Leave a comment

Maher Talal Muhawieh, 31, San Francisco, California, was charged for perpetrating a Ponzi scheme over the course of almost three years. According to court documents, Muhawieh allegedly took in more than $25 million from a total of at least 80 victims.

According to information in the Indictment, which was filed yesterday, Muhawieh told potential victims various lies to get them to lend him money. For example, Muhawieh represented to victims that their funds would be used to purchase and to renovate specific residential properties in San Francisco that would then be sold at a profit. Muhawieh claimed he would make regular and high rates of return for the lenders with limited risk. Muhawieh also represented to victims that their funds were secured by deeds of trust on the residential properties that he represented would be purchased and renovated with the lenders’ funds.

The indictment alleges that Muhawieh operated a Ponzi scheme whereby he used the lenders’ funds to reimburse earlier lenders. In addition, Muhawieh allegedly used the lenders’ funds for a variety of unauthorized activities such as personal expenses and investing in retail businesses located in San Francisco. Unbeknownst to the victims, Muhawieh provided multiple deeds of trust for the properties that purportedly served as collateral for the lenders’ funds; as a result, the deeds of trust did not provide the lenders with adequate security.

Muhawieh is charged in the Indictment with 12 counts of wire fraud, in violation of Title 18, United States Code, Section 1343. The maximum statutory penalty for each count of wire fraud is 20 years imprisonment, a fine of $250,000 or twice the gain or loss, supervised release of three years, and restitution to victims of the alleged scheme. 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. § 3553.

Muhawieh made his initial appearance in federal court in San Francisco. The defendant was released to a half-way house pursuant to a $375,000 secured bond. The defendant’s next scheduled appearance is at 9:30 a.m. on Sept. 21 for a bail hearing before Magistrate Judge Bernard Zimmerman. The defendant is also scheduled to appear before United States District Court Judge Charles R. Breyer at 2:15 p.m. on Sept. 29 for an initial status conference.

United States Attorney Melinda Haag announced the indictment. Jeff Rabkin is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Helen Yee and M. Elizabeth Garcia. The prosecution is the result of a 15 month investigation by the Federal Bureau of Investigation.

Please note: An Indictment contains only allegations against an individual and, as wit all defendants, Mr. Muhawieh must be presumed innocent unless and until proven guilty.

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Allison Tussey

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