Monday, June 02, 2008
24 Yr Sentence In $7M San Diego Mortgage Scam
Theodore Swain, 60, was sentenced to 24 years in state prison for running a $7 million Ponzi scheme that ripped off 100 investors in Southern California. Swain, was also ordered to pay $6.7 million in victim restitution.
Swain used professional looking mass-mailings, directed at tens of thousands of people in southern California, to entice investors into conducting business with First Fidelity Assurance Corporation, based in San Diego, California.
Swain successfully tricked 99 consumers, between 2003 and 2006, into investing between $1,000 and $100,000 in mortgage certificates for properties which did not exist. Swain produced an elaborate and flashy looking investment prospectus, which promised 10% returns on real-estate projects requiring quick financing during the housing boom.
Swain used cash from new investors to pay dividends to old investors, thereby perpetrating his fraud for several years. Swain never disclosed to investors that he had been convicted of grand theft three times and had previously filed for bankruptcy. Under California law, individuals selling investments must disclose any information which might factor into a consumer’s decision on whether or not to invest.
Swain‘s only source of revenue for the scheme was new investment capital from new investors. He strung people along for nearly three years, ripping off a total of $7 million. About $300,000 was occasionally returned to some investors as a way to convince them to stay involved in the fraudulent scheme and lend an air of legitimacy to the operation.
In 2006, Swain was arrested in New Mexico following an investigation by the California Department of Corporations. During the investigation, the attorney general obtained a court order to freeze $2 million in Swain‘s assets and property, money which will be used as restitution for victims of the fraud.
In 2008, after a five-week trial, a San Diego jury found Swain guilty of 15 counts of fraud, 6 counts of grand theft, 3 counts of grand theft of an elder, and 6 counts of running a fraudulent securities scheme. The jury also imposed an excessive taking and white collar crime enhancements of $2.5 million.
“This is the fourth time Swain has been caught ripping people off with his worthless investment schemes,” Attorney General Brown said. “Most recently, he convinced 99 consumers, including a doctor, lawyer and aerospace engineer, to invest tens of thousands of dollars in property which does not exist.”
“This was a very convincing Ponzi scheme,” said Deputy Attorney General Tawnya Boulan who prosecuted the case jointly with the California Department of Corporations. “Swain was very persuasive and ripped off sophisticated investors by maintaining an appearance of success.”
“It is devastating when the financial well-being of California citizens falls into the hands of a con man that uses trickery and deceit,” said Sean Rooney, Senior Trial Counsel for the California Department of Corporations. “Today’s sentencing sends a message that swindlers like Theodore Swain will be thoroughly investigated and prosecuted under California law.”
mortgage fraud
Is this the same Theodore Swain who was (I believe) a former Cook County IL assessor?
Posted by on 06/04 at 06:36 AM
This man built two houses in Deming NM
can anyone give me any infomation on these houses whether they are goin to be auctioned or sold because if they are I am interested in one of them? Can someone please contact me my email address is listed as mari_duran4363@yahoo.com
Thanks
Posted by on 11/15 at 06:14 PM
Convict Swain is obviously not the former Cook County Assessor Swain, a currently licensed IL attorney.
Full Licensed Name: Theodore M. Swain
Full Former name(s): None
Date of Admission as Lawyer by Illinois Supreme Court: December 27, 1954
Registered Business Address: Gould & Ratner
222 N. LaSalle St., Suite 800, Chicago, IL 60601-1011
Illinois Registration Status: Active and authorized to practice law - Last Registered Year: 2008
Posted by on 11/18 at 08:11 AM
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Trial coverage provided by Anne Mitchell, Crazy Fish Realty.
F. Jeffrey Miller Update - October 20, 2009
A hearing was held in Topeka, Kansas in front of Judge Julie Robinson. Miller is currently being held pending his sentencing which is set for December 22nd, 2009 at 9:00 a.m.. Steve Vanatta and Hallie Irvin, Miller's codefendants, will be sentenced at that time also.
Several motions were heard this week. One was a motion for Miller to be released pending his sentencing. Miller's attorney, Jeff Morris, argued that the court had dismmissed with predjudice the matter involving Miller's purchase of a commercial lawnmower, violating the court ordered monitoring agreement. He also argued that Miller was not a flight risk and should be released. This motion was denied.
Another motion heard by Judge Robinson was that of an escrow account containing proceeds from the sale of Miller's forfeited assets. This account has a balance of $143,000. Attorney Morris argued that his firm was due $100,000 for work done in the Miller matter, to date. The government argued that his 'un-itemized fees' were 'exhorbitant'. The balance of the funds, Morris argued, should be released to the Miller family to help pay for mounting household expenses.
The government argued that the 'Asset Forfeiture Provision' applies down to 'the last penny' and that 'the rights of the victims to made whole are of paramount immportance' and that no routine household expenses like Visa bills, are allowed.
Attorney Morris argues that there is more than enough assets to satisfy the jury's judgement of $2.65 million dollars. The government argues that the estimated value of his assets are only $1.4 million.
The government also stated that Miller has been paid dividends from a company Miller has an ownership interest in; Boreflex. From July, 2008 to present, Miller has been paid $330,509.30 from Boreflex, unbeknownst to the court appointed monitor.
Present in the courtroom was Todd Earnshaw. Earnshaw was indicted along with Miller and others in what is commonly referred to as 'Miller I'. That trial is scheduled to begin on January 11, 2010 in Topeka, Kansas.
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Rachel Dollar, the editor of Mortgage Fraud Blog, is an attorney and Certified Mortgage Banker who handles litigation for lending institutions and secondary market investors. She is an author and a nationally recognized speaker on the topic of mortgage fraud. Ms. Dollar is a shareholder with the law firm of 
