REDDING, Calif. (CN) – Eighteen investment LLCs say they were taken for more than $200 million by a recidivist felon who’d already served prison time for a $5 million gold swindle. James Koenig and his cohorts face 79 criminal charges in California after swindling 1,000 investors for $200 million, allegedly to invest in tax-sheltered senior housing centers across the nation.
Koenig set up Asset & Real Estate Investment Company (AREI) and more than 50 affiliates to run his Ponzi scam, according to the complaint in Shasta Superior Court.
The scam went on for 10 years, during which the financial wrecking crew over-leveraged property, stripped it of assets and drove it into foreclosure, depriving investors of their ownership and equity, according to the complaint.
Co-defendants Meecorp Capital Markets, Capital Resources Fund, and Shattuck Hammond Partners encumbered a senior housing facility, Colonnade of Schwenksville, in Pennsylvania, with undisclosed loans, preferred equity and fees to enrich themselves, according to the complaint. Still more defendants, title companies, failed to notify investors of all this, and allowed AREI to withhold title information, all to the plaintiff’s detriment, according to the complaint.
The 18 plaintiffs – AREI Colonnade 1 through 20, LLCs (minus 9 and 19) – intended to “entrust defendants” with only $2.5 million, but when the “defendants oversold the property,” they “raked in substantially more money from the plaintiffs and without plaintiffs’ knowledge,” according to the complaint.
“Koenig is a convicted felon who was sentenced in 1986 to 2 years in prison and ordered to pay $5 million in restitution to investors after he and two partners were convicted of fraud in a gold-selling scam,” according to the complaint. “At least one other senior AREI officer – Adam Peterson, the chief financial officer of AREI – recently served prison time for fraud. …
“In May 2009, after identifying more than 1,000 victims with losses totaling $200 million the California Attorney General filed 79 criminal charges against James Koenig, Gary Armitage and Jeffery Guidi. The charges marked the culmination of a year-long investigation which found that Koenig and Armitage and Guidi created a network of more than fifty-five business ventures over a period of 10 years to enrich themselves and keep their Ponzi scheme afloat.”
The plaintiffs seek establishment of a trust and punitive damages for fraud, conspiracy, negligence and other charges. They are represented by Jeffery Swanson of Redding.