And the beat goes on - or maybe I should say the beatings continue. Always good to see miscreants get their come-uppance. Unfortunately for more than a thousand people the come-uppance comes up too late to save their 'investment' and, in some cases, their retirement.
It's precisely this variability that makes this type of fraud so difficult to prevent. Although the two articles I posted earlier also involved Ponzi schemes and affinity fraud, the crimes are as different as night & day. In one, people with Hispanic surnames convinced other people with Hispanic surnames they could get them into homes they couldn't afford - sometimes multiple homes at once - and made money off them. In the second case, African Americans took gross advantage of other African Americans by promising returns of up to 50% a month for investing in a scheme to help others avoid default.
In this case we have rich white dudes taking advantage of other (formerly) rich folks in a scheme that is pretty sophisticated. Of course if it's going to be based out of Irvine and the perps live in Coto de Caza you know it's going to be an upscale scam. No use wasting that opportunity just to scam a few million when your are surrounded by 'fat mooches'. This caliber investor would be less likely to be suckered in by a two-bit scam so you tailor the scam to the client and -viola - $52 million to spend on vacations, Beemers, airplanes, etc. Hey, if you're going to go - go large eh?
Hopefully they'll be going large for the next decade in the Greybars Hotel & Spa with a close companion named Bubba.
News Release
January 23, 2009
For Immediate
Release
Contact:
Scott Gerber or Christine Gasparac, (916) 324-5500
Attorney General Brown Files Criminal Charges in $52 Million Ponzi Scheme
FOR IMMEDIATE RELEASE
January 23, 2009
Contact: Christine Gasparac or Scott Gerber (916) 324-5500 or Special
Agent Supervisor Randall Hew (323) 855-4743
Attorney General Brown Files Criminal Charges in $52 Million Ponzi
Scheme
ORANGE COUNTY – Attorney General Edmund G. Brown Jr.
yesterday filed 89 criminal charges against 6 men who
“callously conned” more than a thousand people,
including retired senior citizens, out of $52 million through sham real
estate projects, using the investors’ money to buy planes,
expensive cars and lavish vacations.
“These six men callously conned hundreds of people into
investing $52 million into a company that they treated as their
personal bank account,” Attorney General Brown said.
“They fraudulently took investors’ money and spent
it on an array of luxury items, relying on a Ponzi scheme to keep
investors at bay.”
From 2001 to February 2006, Irvine-based Carolina Development Company
peddled $52 million worth of stock to more than a thousand investors.
The company claimed the proceeds would be used to buy and develop
luxury resorts and upscale communities adjacent to golf courses
designed by Arnold Palmer, Jack Nicklaus, and Greg Norman. Investors
bought anywhere from $15,000 to $1 million in stock, including senior
citizens who invested their retirement funds. The company bought some
land, but did nothing to develop it, despite its claim that 85% of the
$52 million invested would be used for land acquisition and
development.
To persuade investors to buy shares of Carolina Development Company,
the defendants claimed that Arnold Palmer had partnered with them. The
defendants promised that investors would reap huge dividends and
assured those who invested a minimum of $100,000 that their investment
would be secured by deeds to specific parcels of land. None of these
claims were true.
The defendants diverted more than $24 million for extravagant bonuses,
personal medical bills, airplanes, fancy meals, BMWs, concert tickets
and luxury vacations. To keep investors at bay, the defendants engaged
in a Ponzi scheme, paying some investors “returns”
on their investment using money from the new investors.
Department of Justice agents served arrest warrants against the
following six defendants, who were charged with grand theft and
securities fraud in Orange County Superior Court:
Lambert Vander Tuig, 50, of Santa Margarita, currently held in the
Orange County Sheriff’s Department.
Jonathan Carman, 45, of Laguna Hills, currently held in the Orange
County Sheriff’s Department.
Mark Sostak, 50, of Ladera Ranch, currently held in the Orange County
Sheriff’s Department. Bail is set at $4.5 million.
Scott Yard, 47, of Costa Mesa, remains at large.
Soren Svendsen, 43, of Coto De Caza, is currently being held in the
Orange County Sheriff’s Department. Bail is set at $2.2
million.
Robert Waldman, 48, is scheduled to turn himself in to authorities.
On Wednesday, representatives of the Attorney General’s
Office obtained arrest warrants from Orange County Superior Court Judge
Selim Franklin.
These criminal charges were preceded by civil actions brought by the
U.S. Securities and Exchange Commission (SEC). The SEC in 2007 won a
$29.2 million judgment against Lambert Vander Tuig, the president of
the company, and a $2.1 million judgment against Jonathan Carman, vice
president of the company.
If convicted, defendants Vander Tuig and Carman could receive sentences
in excess of 10 years in state prison. The remaining defendants would
be subject to lesser prison sentences.
The criminal complaint and affidavit are attached.
You may view the full account of this posting, including possible attachments, in the News & Alerts section of our website at: http://ag.ca.gov/newsalerts/release.php?id=1660
Realtors
- we're part of the solution, not part of the problem. Make it
so.
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