Hard Money Lenders Charged with Fraud

Allison Tussey —  October 13, 2010 — 2 Comments

Barbra Alexander, 63, Monterey, Calif., Beth Pina, 44, Fairfield, Idaho, and Michael Swanson, 62, Seaside, Calif., were indicted by a federal grand jury in San Jose, California, on charges of mail fraud, wire fraud, securities fraud, money laundering, and conspiracy to commit mail and wire fraud.

According to the indictment, Alexander, Pina and Swanson are alleged to have been partners in the management of an investment company called APS Funding, Inc (APS). APS engaged in the business of offering short-term, high-interest loans, also known as “hard money lending,” for business and real estate development purposes. The three partners established several investment funds under the APS umbrella, including GCF, L.L.C. and the Greenlight Fund. The partners recruited investors to purchase shares in these funds. The partners assured investors that their investments would be used to fund the loans. Instead, according to the indictment, the partners attracted few borrowers and made few hard money loans with the invested funds, but instead diverted investor money to pay for the partners’ personal expenses. The indictment alleges that between 2006 and 2009, APS received more than $7 million from investors, yet between the end of 2008 and 2009, more than 90 percent of all of the invested funds were diverted to the partners for their personal use.

Alexander and Swanson were arrested in Monterey County, California, and made their initial appearances in federal court in San Jose. Pina was arrested in Fairfield, Idaho, and will make her initial appearance in federal court in Boise, Idaho. Alexander is next scheduled to appear for an identification of counsel hearing before Magistrate Judge Lloyd. Swanson is next scheduled to appear at 2:30 on Oct. 12, 2010, for a bail hearing before Magistrate Judge Lloyd.

The maximum penalty for each count of Conspiracy to Commit Mail and Wire Fraud in violation of Title 18, United States Code, Section 1349, and for the substantive Mail and Wire Fraud counts, is 20 years imprisonment and a fine of $250,000, or twice the gross gain or gross loss from the offense, plus restitution. The maximum penalty for each count of Securities Fraud in violation of Title 15, United States Code, Sections 78j(b) and 78ff, and Title 17, Code of Federal Regulations, Sections 240.10b-5 and 240.10b5-2, is 20 years imprisonment and a fine of $5 million, plus restitution. The maximum penalty for each count of Engaging in Monetary Transactions in Property Derived from Specified Unlawful Activity, in violation of Title 18, United States Code, Section 1957(a), is 10 years imprisonment and a fine of $250,000, or twice the amount of the criminally derived property involved in the transaction, 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.

United States Attorney Melinda Haag announced the indictment.

Jeff Schenk is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Kamille Singh. The prosecution is the result of an investigation by the Federal Bureau of Investigation, Securities and Exchange Commission, and the Monterey District Attorney’s Office.

Please note, an indictment contains only allegations against an individual and, as with all defendants, Barbra Alexander, Beth Pina, and Michael Swanson must be presumed innocent unless and until proven guilty.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The 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.

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Allison Tussey

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2 responses to Hard Money Lenders Charged with Fraud

  1. is so evident that these low wanted be so call smart people .end up stealing from investors plain simple

  2. the ira rules will aid you in your target businesses.

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