$18 Million Ponzi / Affinity Schemer Gets 12+ Years & $6.8 Million Fine.

By
Real Estate Agent with 1st Action Real Estate

Once in awhile they do get caught. Sometimes it seems like not often enough but then one comes out of the woodwork like this. Over 600 investors were taken advantage of! Promised returns of up to 50% in as little as a months time! My sweet Lord, people – does this not strike ANYBODY as being pretty far out there? Don’t these ‘investors’ bear some responsibility  just for being unusually, oh I don’t know…GULLIBLE? Or would greedy & stupid be more to the point. 

And to make matters worse, in addition to a classic Ponzi scheme, plus taking advantage of people facing foreclosure on their home, she added insult to injury by combining it with an affinity fraud targeting her specific ethnic group – in this case African Americans.

NEWS RELEASE                                                        For Immediate Distribution
January 20, 2009
Thomas P. O’Brien                                                        United States Attorney
Central District of California                                            www.usdoj.gov/usao/cac


WOMAN WHO PROMISED TO HELP HOMEOWNERS AVOID
FORECLOSURE SENTENCED TO OVER 12 YEARS IN PRISON FOR
TAKING MILLIONS FROM INVESTORS IN FRAUDULENT SCHEME

The promoter of an $18 million real estate investment scheme that targeted African-American individuals in Southern California and other states was sentenced  today to 151 months in federal prison.

        Jeanetta M. Standefor, a 40-year-old resident of Altadena, California, was sentenced in Los Angeles federal court by United States District Judge Percy Anderson. In addition to the prison term, Judge Anderson ordered Standefor to pay $8,688,924.

        Through her Pasadena-based company, Accelerated Funding Group (AFG), Standefor operated a bogus "foreclosure reinstatement" program that attracted more than 600 investors between 2005 and 2007. The scheme purported to use investors' funds to cure defaults on distressed properties about to be put into foreclosure. While soliciting investor money and promising returns of up to 50 percent in time periods as short as one month, Standefor and AFG were instead operating a Ponzi scheme that used money from new investors to pay previous investors.

        Standefor pleaded guilty in September 2008 to two counts of mail fraud

        "Ms. Standefor exploited the housing crisis for her own benefit with false promises of help for troubled homeowners and fictitious profits for those willing to help,” said United States Attorney Thomas P. O'Brien. “While there are legitimate companies that work with distressed homeowners, investors and mortgage holders must carefully consider any offer of assistance, particularly when there are suspicious promises that seem too good to be true.”

         Standefor’s fraud was what is commonly called “affinity fraud,” that is, a fraud directed at a particular community. Standefor and AFG targeted investors in the African-American community through a now-defunct Web site, word of mouth, real estate seminars and testimonials by other seemingly successful African-American investors.

        Standefor claimed investor funds would be used to assist owners of distressed properties. Written materials put out by AFG touted its foreclosure reinstatement program as "virtually risk-free" and promised investors that their principal would be safely returned within 72 hours at their request. However, Standefor and AFG did not use investor funds to cure defaults on any residential properties, and investors' requests for return of their investments were ignored.

        Standefor used more than $1.9 million of investor funds for personal expenses, such as her lavish wedding and honeymoon, cars, jewelry, tickets to entertainment events and home renovations.

        This case was investigated by the Federal Bureau of Investigation. In conjunction with the indictment against Standefor, the U.S. Securities and Exchange Commission filed a civil action against Standefor and AFG. The SEC obtained a default against Standefor and AFG on September 18, 2008.

CONTACT:        Assistant U.S. Attorney Stephanie Yonekura-McCaffrey
Executive Assistant United States Attorney
(213) 894-1092
Release No. 09-004

If you think this isn’t happening in your community, think again. Foreclosure/shortsale rescue and affinity frauds are becoming increasingly popular in this market. Be aware. Beware.

Realtors… We’re part of the solution, not part of the problem. Make it so.

Gene Wunderlich - Selling Southwest California Homes including Temecula, Murrieta & The Southern California Wine Country
subscribe to my blog                    southwestcaliforniaghomes.com

Remember, Don't wait to buy real estate - Buy real estate and wait.
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' $18 Million Ponzi / Affinity Schemer Gets 12+ Years'
The opinions in this commentary are strictly Gene Wunderlich's personal opinions. While any reasonable and/or rational indivdual should agree wholeheartedly, the opinons reflected herein may not necessarily be those of SRCAR/GADBLOG, ActiveRain, Coldwell Banker Residential Brokerage, The Valley Business Journal or any local or state government or other mental institution. 

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Rainmaker
135,800
Paul Francis
Francis Group Real Estate - Las Vegas, NV
Las Vegas Real Estate Agent - Summerlin Homes

Nice... and you are certainly right about:

"If you think this isn't happening in your community, think again. Foreclosure/shortsale rescue and affinity frauds are becoming increasingly popular in this market. Be aware. Beware."

Jan 20, 2009 04:52 PM #1
Rainmaker
396,354
Kevin Cavanaugh
Keller Williams Hudson Valley Realty - Tappan, NY
Lic. Associate Broker, ABR, GREEN

One thing is for certain. "There's a sucker born every minute."  P.T. Barnum.

Jan 20, 2009 07:09 PM #2
Rainmaker
1,204,974
Tony & Darcy Cannon
Aubrey and Associates Realty - Layton, UT
The C Team

It is amazing!  Things like that still happen, and I think that the sentence is about right.  It just amazes me with all the information that is available, through the internet and media that things like this still happen.

Jan 20, 2009 07:16 PM #3
Rainmaker
388,769
John Walters
Frank Rubi Real Estate - Slidell, LA
Licensed in Louisiana

I doubt she can ever repay the fine but she will do the time no doubt.  Good post.

Jan 21, 2009 07:22 AM #4
Anonymous
Donnymac

I have made as much as 100% return on money invested in real estate foreclosures in less then six months so this concept is not far fetched. Just because most people are not sophiscated enough to do this doesn't mean it is not done everyday. The rich follow principles of investing that the common man is not privy too and for the most part never will be. That being said I hope these would be investors will use this as a positive lesson and educate themselves before investing in the future. There are plenty honest companies you can do business with and make a decent return but do your homework first.

Apr 11, 2010 02:50 PM #5
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Rainmaker
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Gene Wunderlich

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