Several Charged for Various Real Estate Ponzi Schemes

Allison Tussey —  December 10, 2010 — Leave a comment

Barry Winnett, 49, Roseville, California, agreed to plead guilty on December 1, 2010, to assisting an unnamed co-schemer in the operation of a $2.9 million Ponzi scheme. Winnett‘s plea agreement states that he held himself out as an escrow officer for a company he named Contour Escrow Services, despite never having had a license to perform escrow services.

According to the plea agreement, twenty-two people invested money at the urging of Winnett‘s co-schemer, and Winnett received and disbursed money as directed by the co-schemer. Winnett and the co-schemer both knew that they were using later investors’ money to pay earlier investors. Victims entrusted $2,975,352 to Winnett’s control, thinking that the co-schemer was using the money to invest in real estate and that Winnett was a legitimate escrow officer. Bank account records show that Winnett disbursed $564,241 to the co-schemer, $160,458 to himself, and the remainder among earlier investors.

Assistant United States Attorney Matthew D. Segal is prosecuting the case. Charged 12/1/10, guilty plea filed 12/1/10, arraignment set for 12/6/10 at 2:00 p.m.

Leo Wheeler, 55, Sacramento County, California, was indicted by a federal grand jury on 29 counts of mail fraud related to a real estate investment scheme he operated in Lake County, Calif.

The indictment alleges that Wheeler, a licensed general building contractor, operated two companies: PLK Hartman Road LLC and Providence Homes Inc. From 2005 through 2007, Wheeler solicited investors to provide money for loans to be used for a real estate development project known by the name of the “Hartman Road Project.” The money solicited from investors was purportedly intended to pay off a loan on the property and to pay for infrastructure improvements. Investors were guaranteed an 11 percent annual rate of return and six months of prepaid interest. In fact, much of the money was used by Wheeler for his own personal use and for other unrelated projects with which he was involved. To sustain his scheme, Wheeler created false invoices to document expenditures he did not actually make, had lulling interest payments made to investors, and created fictitious business entities.

Assistant United States Attorney Russell L. Carlberg is prosecuting the case. Indicted 11/24/10, status conference set for 12/17/10.

Christopher Jackson, 43, Sacramento, California, was arraigned on November 15, 2010, after being arrested on a criminal complaint charging him with wire fraud. As charged in the complaint, during the period of 2005 to 2009, Jackson, using the corporate name Genesis Innovations, recruited people to invest in real estate. The complaint further alleges that Jackson promised investors a 14 percent annual rate of return and convinced them to entrust him with their retirement savings. According to the complaint, Jackson received about $11 million dollars from investors, but only invested about $2.5 million in real estate. The complaint states that the rest of the money was used to distribute purported investment returns and to fund Jackson‘s lavish lifestyle, which included a leased Lamborghini and Range Rover, a purchased BMW, frequent meals at high-end restaurants, stays at luxury hotels, and jewelry.

Assistant United States Attorney Matthew D. Segal is prosecuting the case. Charged 11/9/10, preliminary examination set for 1/18/11.

Jesse Alvin Cripps Sr., 57, previously of Visalia, California, was indicted on 27 counts of mail fraud and three counts of money laundering. The indictment alleges that between July 2001 and June 2008, Cripps, who was working as a financial advisor, devised a scheme to defraud investors through various means, using his church contacts to solicit individuals to invest money with him. In most instances, Cripps offered individuals an opportunity to purportedly invest in a real estate investment trust (REIT). The indictment alleges that Cripps told investors that the REIT fund was an investment group for real estate in either Nevada or California, that the REIT fund was secured by real property, that they would earn typically 10 to 12 percent interest per month, and that if the investment did not work out, the investor would still own the property and could sell it. The indictment alleges that, as a result of Cripps‘s false and fraudulent statements, investors gave him money to invest in the purported real estate investment trusts. Instead of investing, Cripps used the money for his own business and personal expenses.

The indictment also alleges that as part of his scheme to defraud, Cripps would periodically send the investors statements showing the purported progress of their investments and the interest earned to date. The defendant would also use investors’ money to pay interest amounts owed to other investors. The indictment alleges that the periodic payments and statements lulled the investors into believing in the legitimacy of their investments, brought in new investors, and avoided reporting to and detection by law enforcement.

Assistant United States Attorney Michele Thielhorn is prosecuting the case. Indicted 11/10/10, arrested in Texas, arraignment set in Fresno on 12/8/10.

James Berghuis, 38, formerly of Sacramento, California, was indicted and arrested September 2, 2010, on charges of mail fraud, wire fraud, and money laundering, relating to his operation of Berghuis National Lending Inc., a Sacramento mortgage and lending company. Through his company, Berghuis offered short-term bridge loans for clients that were funded by private investors. Berghuis would identify clients in need of bridge loans and act as the intermediary between the clients and investors. The indictment alleges that beginning no later than April 2005, Berghuis began making material false representations to investors and using investor funds to pay off other investors, pay business expenses, and for his own personal expenses.

Assistant United States Attorney Camil A. Skipper is prosecuting the case. Indicted 9/1/10, status conference set for 1/10/11.

The charges are only allegations and a defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

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