Archives For Ponzi Scheme

Homayoon Daneshvar, 63, Washington, D.C., was sentenced to 18 months in prison.  The charges related to a $1.9 million real estate investment fraud scheme.

Danshevar was also ordered to serve three years of supervised release, forfeit $1.945 million, and pay $926,020 in restitution.

Daneshvar pleaded guilty on October 24, 2016.

According to court documents,  Daneshvar engaged in a real estate investment fraud scheme from in or about April 2009 to January 2013.  Deneshvar lied and made false promises to eight victim investors to persuade them to give him approximately $1.9 million. Daneshvar told the victim investors the money would be used for bridge financing to purchase foreclosed property that would be “flipped,” or quickly resold for profit. Daneshvar promised the investors a monthly return on their investments.  In reality Daneshvar used the money to invest in the stock market, pay “returns” on the investments back to the investors, and to pay for his own personal expenses.

The victims of the real estate investment fraud included a 78-year old retiree who invested her retirement savings.  Another victim was a permanently disabled Marin Corps veteran who borrowed against his home, according to court documents.  When the victims became suspicious, Daneshvar them that their money was tied up in properties and that their investments had grown. Eventually, he confessed that he had been lying to the investors and running a Ponzi scheme.

Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; and Andrew W. Vale, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after sentencing by Senior U.S. District Judge Claude M. Hilton. Assistant U.S. Attorney Grace L. Hill prosecuted the case.

James Mulholland, 59 and Thomas Mullholland, 59, have been sentenced to 10 to 20 years in prison on eight felony convictions by District Judge William Collette for running an $18 Million Ponzi scheme. The prison sentences for all eight convictions will be served concurrently with the maximum being 10-20 years.

These two men abused the trust they were given for their own personal gain and today’s sentence is long overdue,” said Michigan Attorney General Bill Schuette in making the announcement. “The sentences today will not repay the life savings they stole, but it will stop these brothers from ever doing this again.”

They were found guilty in a jury trial in front of Judge Collette at Ingham County Michigan District Court on August 9, 2016.

Thomas and James Mulholland started their business, Mulholland Financial in 1987. They bought real estate to be used as rental properties mostly in college towns. At the height of their business Mulholland Financial managed $22 million worth of highly leveraged real estate however they were not prepared for the recession in 2008.

Starting in 2009 until they filed for bankruptcy in 2010, the brothers raised almost $2 million from investors. They made no mention that their business was in trouble and promised a 7% rate of return from the real estate profits and that the principal and interest were guaranteed and could be liquid within 30 days of making a written request.

In reality almost every month from January 2009 to February 2010, Mulholland Financial lost money and new investor money began being used to pay off earlier investors. The Mulholland brothers knew the business was losing money and consciously decided to purchase more property in an attempt to get themselves through the crash. To do so, they increased their attempts to procure investors. At the end of 2009, they reached out to previous investors and urged them to reinvest. They again said there would be a guaranteed 7% return and they also indicated that 2009 had been their best year ever, not revealing any of the financial problems they were facing.

Mulholland Financial was forced to file for bankruptcy in February of 2010 due to overwhelming debt. By this time there were multiple investigations being conducted into the business practices. The case sat dormant with another agency until spring of 2016 until Schuette’s office picked up the case. Over 250 investors lost $18.3 million.

All the victims have been identified and were listed in various bankruptcy pleadings. The Attorney General is seeking $208,000 from the Mulholland brothers in restitution. Under Michigan law,  restitution can only be ordered in counts charged that result in conviction. All victims received some proceeds from their 2010 bankruptcy.

The Mulholland brothers were sentenced on all eight charges as follows. All charges will be served concurrently:

  • One count of Criminal Enterprises – Conducting, 10-20 years in prison
  • One count of Conspiracy to Commit Criminal Enterprise – Conducting, 10-20 years in prison;
  • One count of False Pretenses -$20,000 Or More But Less Than $50,000, 100 months -15 years in prison;
  • One count of False Pretenses – $1,000 Or More But Less Than $20,000, 3-5 year sin prison;
  • One count of Blue Sky Laws- Fraudulent Schemes/ Statements, 6-10 years;
  • One count of Securities Fraud, 6-10 years;
  • One count of Blue Sky Laws Offer/Sell Unregistered Securities, 6-10 years; and,
  • One count for Violation of the Securities Act, 6-10 years.

James Hurst Miller Jr., 67, Paso Robles, California, the former president of the Atascadero-based Hurst Financial Corporation, to 84 months in federal prison for misappropriating millions of dollars that victims invested in Central Coast real estate projects and for helping a real estate developer defraud a bank.

Miller’s case is related to that of Kelly Gearhart, a former Central Coast real estate developer, who was sentenced in July to 14 years in federal prison. Continue Reading…

Paul Sloane Davis, 76, Santa Rosa, California, was sentenced to 36 months in prison and ordered to pay $1.7 million in restitution, for a Ponzi scheme he perpetrated along with co-defendant Diane Cobb, 58, currently a resident of the State of Ohio.  The sentencing follows a guilty plea in which Davis admitted to running a fraudulent scheme.  Court documents establish that Davis and Cobb profited by more than a million dollars.

Davis was charged by indictment on October 31, 2013, for his part in the scheme.  According to the indictment, Davis and Cobb operated a financial services company in Marin County known as DM Financial.  Through DM Financial, Davis and Cobb offered investors the opportunity to fund purported short-term “bridge loans” to borrowers who, according to Davis and Cobb, needed short-term financing for residential real estate transactions.  The defendants fraudulently provided to these investors, among other things, the identity of the purported borrower, a promissory note reflecting the amount and terms of the loan, and a deed of trust securing the loan to the borrower’s real property.  Based upon these documents and other representations made by Davis and Cobb, the investors believed the defendants were directing the funds into secured loans with borrowers. Continue Reading…

Charles Wooden, 48, Stone Mountain, Georgia, was sentenced to seven years in prison to be followed by three years of supervised release, and to pay restitution of $2.4 million. Hendrickx H. Toussaint, 44, a now disbarred lawyer, Decatur, Georgia, was sentenced to three years, ten months in prison to be followed by three years of supervised release, and to pay restitution of $1.2 million.  The sentenced arise out of a real estate-based Ponzi scheme that took in almost $5 million dollars from out-of-state and foreign investors.

According to U.S. Attorney John Horn, the charges, and other information presented in court: In or about 2009, Charles Wooden, doing business as Aeon Capital Management, LLC, held himself out to the public as a real estate broker who could locate and oversee the purchase of residential properties and apartment buildings for or on behalf of real estate investors.  Wooden purported to find properties that could be flipped in a short period for a profit, and also properties that he would manage for the investors.  Continue Reading…

A father and son schemed with a Chicago attorney and a Lincolnwood businessman to sell $2.9 million in phony mortgages to more than a dozen duped investors, according to a federal indictment.

Albert Rossini, 67, the owner of Devon Street Investments Ltd., Lincolnwood, Illinois plotted with Babajan Khoshabe, 74, Chicago, Illinois, and Khoshabe’s son, Anthony Khoshabe, 33, Skokie, Illinois, to fraudulently induce at least 15 victims into purchasing purported mortgage notes on apartment buildings in foreclosure, according to the indictment. The trio promised that investors would receive rental income from occupants of the buildings, followed by title to the properties at the conclusion of the foreclosure process, the indictment states. In reality, it was a ponzi scheme.  the trio did not own the mortgage notes, and instead used the victims’ funds to make Ponzi-type payments to other investors and pocket the rest, according to the indictment. Continue Reading…

William Donnelly Yotty, 69, who currently resides in Monarch Beach, California but during the course of the scheme lived in Lodi, California, pleaded guilty to the federal mail fraud and wire fraud charges for operating a Ponzi scheme that featured false promises of large returns to victims who invested in debt obligations and distressed real estate.

In a plea agreement filed in United States District Court, Yotty admitted that he ran several Lodi-based companies that offered bogus investments in corporate debt obligations and in distressed real estate that he and his salespeople said could be “flipped” for substantial profit. Continue Reading…

Michael J. Stewart, 68, San Clemente, California, the CEO of a now-defunct Southern California real estate investment firm, was found guilty of 11 counts of mail fraud following a nine-day jury trial before United States District Judge Cormac J. Carney.  The charges arose out of a real estate scheme that ended with the bankruptcy of the company and hundreds of investors collectively losing as much as $169 million.

Stewart owned and was the chief executive of Pacific Property Assets (PPA), which had offices in Long Beach and Irvine, California. Along with co-defendant John Packard, Stewart created PPA in 1999 to purchase, renovate, operate, and resell or refinance apartment complexes in Southern California and Arizona. Typically, PPA financed property acquisitions through mortgages, and it raised money from private investors to pay for renovations to the properties. After several years, PPA would refinance (or sometimes sell) each property. Continue Reading…

Trial Continues in Case Against Real Estate Firm Co-Owner Accused of Ponzi Scheme

The trial of a Phoenix man accused of setting up a real estate Ponzi scheme during the Great Recession continued in Santa Ana on Tuesday.

According to federal prosecutors who spoke with jurors at court, Michael J. Stewart—a co-owner of a real estate firm based in Irvine and Long Beach—set up the Ponzi scheme to pay off old investors while continuing to recruit new ones for a plan to flip distressed apartment buildings during the Great Recession’s housing collapse.

Stewart’s attorney told jurors that in fact his client was innocent and thought his plan was financially prudent because homeowners who lost their property in foreclosure would need to rent apartments.

Randy Poulson, 44, Woolwich Township, New Jersey admitted scamming distressed homeowners into giving him their houses and then soliciting fake real estate investments from private investors – secured by those same properties – that netted him more than $3 million in illicit profits.  He pled guilty to Count One of an indictment charging him with mail fraud.

According to documents filed in the case and statements made in court: Continue Reading…