Man Indicted for Scratch and Dent Ponzi Scheme

Allison Tussey —  October 4, 2010 — 1 Comment

Bruce Fred Friedman, 60, the owner of a Sherman Oaks, California, company that promised investors healthy returns with claims of a successful business based on the rehabilitation of “scratch and dent” real estate was indicted on federal fraud charges that allege he operated a Ponzi scheme that took in nearly a quarter billion dollars.

Friedman, the operator of Diversified Lending Group, Inc. (DLG), was named in an indictment returned by a federal grand jury. The indictment charges Friedman with 15 counts of mail fraud, one count of wire fraud and seven counts of money laundering in the scheme that collected approximately $228 million.

The indictment and a related criminal complaint filed earlier this month allege that Friedman obtained funds from investors who were falsely told that DLG had a healthy stream of income from thousands of rental properties across the United States that DLG had purchased, rehabilitated and rented out. Through personal solicitations and outside marketers, Friedman offered “secured investment notes” that promised annual returns of either 9 percent or 12 percent compounded monthly.

The indictment alleges, however, that the claims made by Friedman were fictitious. Friedman allegedly spent a substantial amount of investors funds on other business ventures, investments, and other purposes, such as a charitable foundation and companies affiliated with his family members and friends.

In an affidavit in support of a criminal complaint filed in this case on September 3, 2010, a special agent with the FBI estimated that Friedman‘s victims have suffered losses of approximately $191 million.

Friedman was arrested on September 13, 2010, outside a hotel where he was staying in Cannes, France. Friedman is in custody in France pending extradition proceedings.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty.

If he is convicted of the 23 charges contained in the indictment, Friedman would face a statutory maximum sentence of 390 years in federal prison.

This case was investigated by the Federal Bureau of Investigation and IRS – Criminal Investigation. The FBI’s Legal Attache in Paris and the French Police Judiciare have assisted in this matter.

Allison Tussey

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One response to Man Indicted for Scratch and Dent Ponzi Scheme

  1. well what do you known about that!! There are people and groups that have come to pine village N townhomes in harris county tx. who claim to have rehabed other properties in the u.s. but can not show proof.This same group claims to be able to handle investments in MEXICO going in both directions north to south and south to north.take out a D,B.A. in San Diego and years later file corporation papers in Tx. buy property and then disolve the corporation.I wonder if Cal knows about this and do these people owe tax in ca.G.Uber

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