Man Arrested for $12M Real Estate Ponzi Scheme

Allison Tussey —  October 15, 2010 — Leave a comment

Robert R. Anderson, 59, Mt. Prospect, Illinois, was arrested on federal fraud charges for allegedly operating a “Ponzi” scheme in which he fraudulently obtained about $12 million from approximately 70 investors who were promised extraordinary returns from a purported real estate business. Anderson was charged with wire fraud in a criminal complaint that was unsealed after he was arrested by FBI agents at his home. Anderson allegedly swindled more than $4.1 million of investors’ funds for other unrelated investments, for payments to others, and for his and his family’s personal use.

According to the charges, Anderson has been president of Affordable American Homes, Inc. (AAH), and secretary of Rosand Enterprises, Inc. (REI). REI‘s web site claimed that REI managed the operations of AAH, as well as several other businesses that purportedly manufactured residential construction components, exported housing to other countries, and provided training in building trades. Most of REI‘s and AAH‘s revenue came from the sale of promissory notes to investors.

While claiming to own approximately 200 parcels of real estate in Illinois, Indiana and Wisconsin on which he was building houses, records show that AAH, in fact, owned only a single property on Michigan Avenue in Chicago with a 2008 estimated market value of $195,788. In 2008 and 2009, Anderson allegedly blamed the “devastation that befell the mortgage industry” in statements to investors to explain his lapse in making interest payments.

Between 2006 and September 2010, Anderson allegedly schemed to defraud and to obtain money from investors through the sale of promissory notes issued by REI, which unconditionally guaranteed the payment of monthly interest between 10 and 20 percent for terms ranging from six months to a year. Anderson falsely represented that the funds would be used as collateral for a line of credit that he would use to build low-income housing and that the interest payments to investors were generated from the closings of the houses, the charges allege. Either personally or through unnamed Individual A, whom he told investors was his agent, Anderson provided investors and prospective investors with false information about the status, risks and guaranteed nature of the investments, the use of investors’ funds, the success of REI‘s business, and the source of funds to make interest payments. At the same time, he allegedly concealed the Ponzi-type payments being made to investors, as well as his misuse of their funds for his own benefit.

Anderson allegedly bolstered his scheme by depositing investor funds in escrow accounts of unnamed Law Firm A to reassure investors about the safety of their funds. Based on analysis of bank records, documents, interviews with victim investors and information from the SEC, between January 2006 and May 2009, Anderson allegedly obtained about $12 million from approximately 70 investors. He used approximately $7,869,000 of these funds to make Ponzi-type guaranteed interest payments to investors, while misappropriating the balance of approximately $4,177,000, including more than $1.9 million for unrelated investments, more than $445,000 for payments to others, including his associates and partners, and more than $818,000 for his and his family’s personal use, the charges allege. There was no indication from account transactions that Anderson received any income from the sale of homes or made any payments to construction subcontractors.

Anderson will appear before Magistrate Judge Sheila Finnegan in U.S. District Court.

The Securities and Exchange Commission, which assisted in the investigation, filed a civil complaint in Federal Court in Chicago against Anderson and his company seeking a permanent injunction, disgorgement of fraud proceeds and financial penalties.

The Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit: www.StopFraud.gov.

Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, and Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation announced the arrest.

The government is being represented by Assistant U.S. Attorney Halley Guren.

Wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine, and restitution is mandatory. The Court may also impose a fine totaling twice the loss to any victim or twice the gain to the defendant, whichever is greater. If convicted, however, the Court would determine a reasonable sentence to impose under the advisory United States Sentencing Guidelines.

A complaint contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

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