LOS ANGELES (CN) - A Long Beach man pleaded guilty Thursday to his part in a $110 million Ponzi real-estate scam.
John Packard, 64, pleaded guilty to mail fraud, the U.S. Attorney's Office said.
He was an owner of Pacific Property Assets, whose bankruptcy cost banks and investors more than $110 million. It had offices in Long Beach and Irvine.
Stewart and co-defendant Michael J. Stewart, of Phoenix, created their company to buy, operate, renovate and resell apartment complexes in Southern California and Arizona, prosecutors said.
Stewart is scheduled for trial on April 14, 2015.
They bought, refinanced and sold properties, and it worked until real estate crashed in late 2007, prosecutors said.
Then, after raising "tens of millions of dollars from hundreds of investors," it didn't work anymore, the U.S. attorney said: It turned into a Ponzi scheme.
They used new money to pay off old investors, and themselves. "Packard admitted that by October 2008, he and Stewart knew that PPA was dependent on these investor loans to make its monthly debt payments and continue operating, and was unable to raise money through other means," according to the U.S. attorney.
When PPA and its affiliates filed for bankruptcy in June 2009, they owed private investors more than $91 and owed banks another $100 million, prosecutors said.
The private investors got nothing and the banks lost $24 million.
Packard faces up to 20 years in prison at his May 18, 2015 sentencing.
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