DALLAS (CN) – A co-founder of Golden Gate Real Estate Investment Trust was sentenced to 7 years in federal prison and ordered to pay $1.9 million in restitution to investors he defrauded. His co-founder, facing 17 years, is a fugitive.
James A. Testa, 61, of Carrollton, pleaded guilty in April 2009 to one count of engaging in monetary transactions in criminally derived property.
Testa and Golden Gate co-founder Michael R. Rouse raised more $2 million in 2003-2004 by claiming their REIT was a safe investment in real estate. But prosecutors said none of the money was invested in real estate and that the only investments they made were in foreign currency trades, which lost money.
“The investors lost most or all of their money, while Testa and Rouse paid themselves handsome salaries and spent the investors’ funds on business and personal expenses, including Mercedes Benz automobiles that cost more than $125,000 each,” the U.S. Attorney’s Office said.
Rouse, 56, formerly of Wellington, Fla., is a fugitive. He was convicted at trial in April on one count of conspiracy to commit securities fraud, mail fraud and money laundering, two counts of securities fraud and aiding and abetting, five counts of mail fraud, and one count of money laundering. He was sentenced in July to 17 years and 6 months in federal prison and ordered to pay $1.9 million in restitution.
Testa must surrender to the Bureau of Prisons by Sept. 27.