Edward G. Locker, 37, Highland Heights, Ohio, was sentenced to 30 months in prison for his role in a real estate investment fraud scheme.
On September 24, 2012, co-defendants Richard F. Tipton, 62, Palo Alto, California, and David C.H. Lin, 44, Sunnyvale, California, were sentenced to 18 and 28 months in prison, respectively, for their role in the same scheme. On August 20, co-defendant James W. Ward, 66, Delaware, Ohio, was sentenced to 60 months’ imprisonment for his role in the scheme. The Court imposed these sentences based upon the defendants’ convictions for engaging in a conspiracy to commit mail and wire fraud in connection with their operation of Mountain View private money lenders known as Jim Ward and Associates, Inc. and JSW Financial, Inc.
As previously reported by Mortgage Fraud Blog, Messrs. Ward and Locker pleaded guilty on December 6, 2011, to conspiracy to commit mail and wire fraud. On December 7, 2011, Tipton pleaded guilty to the same offense.
According to their plea agreements, Messrs. Ward, Locker, and Tipton admitted that they deceived investors in Jim Ward & Associates, Inc. (“JWA“), and its successor, JSW Financial, Inc. (“JSW“). Using funds obtained from investors, the defendants, through JWA and JSW, arranged and serviced private money loans to borrowers who built single family homes. JWA and JSW offered investors the opportunity to invest in fractional interests in these loans and in the Blue Chip Realty Fund, LLC and Shoreline Investment Fund, LLC.
According to those defendants’ plea agreements, JWA and JSW generated and provided documents to investors that represented that Blue Chip and Shoreline made and invested in loans that were secured by deeds of trust on real property. However, the defendants knew that those representations were false, because JWA and JSW did not secure investments in Blue Chip and Shoreline.
On May 15, 2012, after an eight-day trial, a jury convicted Lin of conspiring to commit mail and wire fraud, and on sixteen counts of mail fraud, and one count of wire fraud. The evidence at trial showed that Lin and his co-conspirators deceived investors about the security of their investments in Blue Chip and Shoreline, and spent Blue Chip and Shoreline money in an unsecured manner 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.
Ward, Locker, Tipton, and Lin were indicted by a federal grand jury on June 21, 2011. All defendants were charged with eighteen counts alleging conspiracy to commit mail and wire fraud, mail fraud, and wire fraud, in violation of 18 U.S.C. 1349, 1341, and 1343.
The sentence was handed down by U.S. District Court Judge Thelton E. Henderson. Judge Henderson also sentenced each defendant to a three-year period of supervised release, and to pay restitution in an amount to be determined at a hearing on October 29, 2012. All of the defendants were ordered to begin serving their prison sentences on January 7, 2013.
United States Attorney Melinda Haag announced the sentence.
Thomas E. Stevens and Kyle F. Waldinger are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Rawaty Yim. 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.