David C.H. Lin, 44, Sunnyvale, California, an attorney, was convicted by a federal jury of conspiracy to commit mail and wire fraud, and multiple counts of mail and wire fraud, in connection with his role in a private money lender scheme.
The defendant conspired with his business partners to commit fraud on investors in private-money lender JSW Financial Inc. (JSW), based in Mountain View, Calif. The guilty verdicts followed an eight-day jury trial before U.S. District Court Judge Thelton E. Henderson.
Evidence at trial showed that Lin and his co-conspirators used funds obtained from investors to arrange and service private money loans to borrowers who built single family homes. JSW offered investors the opportunity to invest in fractional interests in these loans and in two investment funds: the Blue Chip Realty Fund, LLC (Blue Chip) and Shoreline Investment Fund, LLC (Shoreline).
JSW told Blue Chip and Shoreline investors that their investments would be secured by deeds of trust on real property. The evidence at trial, however, showed that those representations were false: JSW did not secure the investments in Blue Chip and Shoreline, and used Blue Chip and Shoreline money on failed real estate projects and for other purposes such as interest payments and business expenses. Ultimately, Blue Chip and Shoreline investors suffered a multi-million dollar loss. Lin was in-house counsel for JSW.
The jury convicted Lin of all eighteen counts alleged in the indictment ““ one count of conspiracy to commit mail and wire fraud, in violation of 18 U.S.C. Section 1349; sixteen counts of mail fraud, in violation of 18 U.S.C. Section 1341; and one count of wire fraud, in violation of 18 U.S.C. Section 1343.
Lin, James S. Ward, 65, Delaware, Ohio, Edward G. Locker, 36, Highland Heights, Ohio, and Richard F. Tipton, 62, Palo Alto, Calif., were indicted by a federal grand jury on June 21, 2011. In December 2011, Ward, Locker and Tipton pleaded guilty to conspiracy to commit mail and wire fraud.
Lin initially appeared in federal court on Aug. 9, 2011, was released on a $100,000 unsecured bond and remains released on that condition.
Lin is scheduled to be sentenced on Aug. 20, 2012. Ward, Locker and Tipton are scheduled to be sentenced before Judge William H. Alsup in San Francisco, on June 26, 2012.
The maximum statutory penalty for each of the eighteen counts alleged in the indictment is twenty years imprisonment and a fine of $250,000, or twice the gross gain or loss, whichever is greater, plus restitution. 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(a).
United States Attorney Melinda Haag announced the jury’s verdict.
Thomas E. Stevens and Kyle F. Waldinger are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Rawaty Yim and Rayneisha Booth. The prosecution is the result of a two-year investigation by the Federal Bureau of Investigation. The United States Attorney’s Office recognizes the valuable assistance of the San Francisco Regional Office of the Securities and Exchange Commission in this matter.
“The FBI is committed to bring to justice those who defraud and exploit investors,” FBI Special Agent in Charge Stephanie Douglas said. “We will continue to work closely with our law enforcement partners and the community to root out those offenders who undermine the integrity of our financial systems.”
“Our markets depend upon truthful and accurate information being communicated to investors,” U.S. Attorney Haag said. “When investment firms betray that trust, they undermine the confidence upon which our economy depends. My office will continue to pursue those responsible for such misrepresentations to the fullest extent of the law.”