Fugitive Who Defrauded Homeowners in 3 Separate Scams Arrested

Allison Tussey —  December 3, 2013 — Leave a comment

David Kaup, 30, San Gabriel, California, who was scheduled to be sentenced in December 2012, but failed to appear in court for his sentencing hearing, was arrested in Las Vegas, Nevada.

The defendant was scheduled to be sentenced Monday, December 17, 2012, in United States District Court in Los Angeles, California, after pleading guilty to two counts of wire fraud on April 9, 2012. Once it had been established that Kaup fled the area and justice, a federal judge issued a warrant for his arrest on December 17, 2012. The FBI subsequently publicized Kaup’s photo and description in a wanted poster after efforts to immediately locate him were unsuccessful.

Local media outlets also reported on the case and, recently, Kaup was among fugitives featured on CNBC’s program American Greed: The Fugitives. Shortly after the CNBC story aired, agents investigating the case received information that led them to a residence in Las Vegas, Nevada, where Kaup had been residing. Kaup was arrested without incident by agents assigned to the FBI’s Las Vegas Field Office and was in federal court in Las Vegas.

According to his plea agreement, Kaup carried out three separate fraud schemes, each of which caused millions in losses to victims. Kaup admitted in his plea agreement that over a period of approximately five years, he defrauded more than 50 families out of more than $11 million. Many of these victims were working class families who sought Kaup’s assistance in refinancing their homes.

Kaup admitted in his plea that he had operated several companies, including Lunden Investments, American Loans and Funding, and First Mortgage West, each of which was based in Los Angeles. Through Lunden Investments, Kaup convinced investors to give him more than $9 million, which he said he was going to use for commercial loans. Kaup admitted in his plea, however, that he instead lost approximately $9 million of the victims’ money trading on the foreign currency exchange market.

After defrauding these victims, Kaup started a separate scheme to deceive homeowners into sending him money. In his plea, Kaup admitted that through his second company, ALF, he told homeowners that he could refinance their homes at below-market rates, so long as they provided certain funds up front to demonstrate that they financially qualified for the special loan terms. These funds were supposed to be kept safe during the loan process and then returned when the loan was either approved or denied. Kaup admitted that he never tried to refinance the homeowners’ loans, and instead used the victims’ money to buy luxury items for himself and to trade on the foreign currency exchange market. After this scheme collapsed, Kaup admitted in his plea that he ran the same scheme, along with others, through a third company, FMW. In all, through ALF and FMW, Kaup admits that he defrauded more than 50 families out of approximately $2 million.

Bill Lewis, Assistant Director in Charge of the FBI’s Los Angeles Field Office, and André Birotte, Jr., the United States Attorney in Los Angeles, made the announcement.

The fraud case against Kaup and others was investigated by the FBI. Kaup is being prosecuted by the United States Attorney’s Office in Los Angeles. Kaup is expected to be returned to Los Angeles in the near future.

Allison Tussey

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