7 charged in $17M multistate fraud schemes
SACRAMENTO (AP) — A federal indictment unsealed Friday charged seven people with running a multistate Ponzi scheme and related mortgage fraud scams that prosecutors said cost investors and lenders a combined $17 million.
The years-long investigation resulted in the arrest of 55-year-old Lawrence Leland Loomis. He and his father-in-law, John Hagener, 76, were charged with operating a fraudulent California-based investment fund that cost more than 100 investors more than $7 million.
Both men are from Granite Bay, a wealthy Sacramento suburb.
They pleaded not guilty Friday in federal court in Sacramento. Loomis was ordered held, while Hagener was freed on $1 million bond.
Loomis and five other defendants are also charged in a 50-count indictment with costing lenders $10 million in losses through two mortgage fraud schemes.
Prosecutors said all three frauds were operated through Loomis Wealth Solutions, which was based in California and also worked with investors in Illinois, Washington and elsewhere from 2006 through 2008.
"We are bringing to justice some of those who are responsible for the mortgage crisis in this district and elsewhere," U.S. Attorney Benjamin Wagner said in a statement announcing the indictments.
Hagener's attorney, William Portanova, said the investigation was under way for at least four years before his client was charged.
"We're looking forward to a resolution of this matter. It's been a long investigation and we're all ready to move forward," Portanova said. "Large-scale, long-term white collar investigations are by their nature measured by calendars, not stopwatches."
Assistant federal defender Douglas Beevers declined comment on behalf of Loomis. The other defendants did not appear in court Friday, and it was not immediately clear if they had retained attorneys.
Loomis and Hagener were charged with bilking investors through a program called Naras Funds in 2007 and 2008. The indictment said Loomis encouraged investors to tap their home equity and retirement accounts to buy shares in the funds and to help purchase residential real estate.
He called the investments "simply the best financial plan ever created," according to prosecutors.
He and his father-in-law allegedly promised 12 percent annual returns and said the funds were guaranteed, but the indictment claims the men used investors' money to pay themselves, their companies' operating expenses, and to prop up the scheme by paying later investors with money from earlier victims.
Loomis and a real estate appraiser, Darren Fehst, 44, of Halifax, Nova Scotia, are also charged in connection with a mortgage fraud scheme in which Loomis is accused of paying Fehst thousands of dollars to overstate appraisals so properties could be sold for inflated prices.
Loomis and four others also are charged with buying about 200 properties in Arizona, California, Florida and elsewhere while falsifying the sales prices and costing lenders about $10 million.
The others are Michael Llamas, 27, of Tracy; Peter Woodard, 54, of Ventura; Joseph A. Gekko, 43, of Yorba Linda; and Dawn C. Powers, 42, of Lincoln.
All are charged with mail and wire fraud. Each fraud charge carries a maximum possible sentence of 20 years in federal prison.
All seven defendants were ordered to appear in court on Oct. 10.