Michael Stewart and John Packard Arrested for Multi-million Dollar Ponzi Scheme by the FBI
The former owners of a defunct real estate firm in Southern California were arrested by agents of the Federal Bureau of Investigation after being charged in a Ponzi scheme that resulted in the loss of over $110 million to investors.
66 year-old Michael Stewart of Phoenix and 63 year-old John Packard of Long Beach, were indicted before a federal grand jury in January. They’ve been formally charged for two counts of bankruptcy fraud, three counts of bank fraud, and 11 counts of mail fraud. If convicted on all counts, Phoenix and Packard could face up to 320 years in federal prison.
In 1999, Phoenix and Packard, co-founded Pacific Property Assets, which was established to refinance and resell apartment complexes located in California and Arizona. While property values increased, the company could refinanced mortgages and used the proceeds to pay their investors and business expenses. However, in 2007 the real estate market began to slow down and the company was unable to refinance their properties and pay their mortgage obligations.
Packard and Stewart then resorted to raising millions of dollars from new investors, whose investments they then used to pay earlier investors, mortgage payments and themselves, prosecutors said.
The company also allegedly provided false financial information to Vineyard Bank. The company concealed its losses while inflating its income in their statements, in order to procure additional loans and to keep its line of credit open, according to prosecutors.
Due to the growing debt, Pacific Property Assets eventually filed for bankruptcy on June of 2009. Despite this, Stewart and Packard continued to commit fraud by allegedly withdrawing $165,000 from the company’s accounts and hiding the same from their creditors.
As of 2012, Packard and Stewart, are also facing a pending lawsuit filed by the Securities and Exchange Commission accusing them of fraud and seeking to obtain monetary penalties.
The Peiffer Rosca securities attorneys often represent investors who lose money as a result of Ponzi schemes, investment fraud, or stockbroker misconduct. They are currently investigating possible option to assist victims in recovering their investments. They take most cases of this type on a contingency fee basis and advance the case costs, and only get paid for their fees and costs out of money they recover for their clients.
Investors who believe they lost money as a result of investment fraud or misconduct may contact the securities lawyers at Peiffer Rosca, Jason Kane or Joe Peiffer, for a free, no obligation evaluation of their recovery options, at (585) 310-5140.