FBI Charges Money Manager With Fraud

(CN) - The CEO of a boutique financial services firm catering to rich people and institutions defrauded investors of $4.7 million through funding requests for bogus property deals, federal prosecutors say in Manhattan. William Landberg, CEO of West End Financial Advisors, allegedly used the money to pay off obligations of his funds or to pay off an unrelated line of credit.

In one case, allegedly involving a property in Florida, the purported deal was a complete fabrication; in another, in Alabama, the deal never closed, an FBI agent said.

According to the agent's 6-page statement alleging securities fraud, Landberg created and managed several investment vehicles, and raised money for them by selling limited partnership interests.

In the case of the West End Short Term Mortgage Fund LP, described in the agent's affidavit as a "hard money fund," the goal was to "achieve short term, high-yield interest income through the making, servicing, purchasing, selling and repurchasing, and purchasing and selling participation in, mortgage loans."

The mortgages would be sold to MCC Finding, a wholly-owned subsidiary of the West End Short Term Mortgage Fund, which would purchase the mortgages with money provided by the fund and the New York Branch of West LB.

West LB would then receive the acquired mortgages as collateral for its advances.

In February 2009, in a transaction the FBI dubbed the "Fruitville Loan," Landberg signed an advance request for $3 million to be used to purchase the mortgage on a Florida property. West LB wired the money into an MCC Funding account Landberg controlled, but rather than acquire a mortgage, he used it to pay the interest on the line of credit and to transfer money into his franchise fund, the FBI says.

In April, 2009 Landberg again signed an advance request for funding, this time $1.6 million, to be used to buy the mortgage on a property in Alabama.

In this case, dubbed the "Ashley Furniture Transaction," investigators say the deal never closed, and the funding was never needed. Landberg used the money to make a cash infusion into the franchise fund, to cover investor distribution checks and overdrafts, and transferred $200,000 into a separate fund he controlled, according to the FBI.

The FBI charged Landberg with one count of securities fraud. It asks that he be jailed or released on a substantial bond.

Andrew Ryder, a special agent for the FBI, laid out the government's case in the complaint.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit