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, Alan Rosca or Joe Peiffer, for a free, no obligation evaluation of their recovery options, at 888-998-0520.

Alan Rosca (1225 Posts)

Alan is a securities lawyer. He also teaches Securities Regulation at the Cleveland-Marshall College of Law. He focuses his legal practice on complex commercial and financial litigation and arbitration, particularly in the areas of securities and investment fraud. His office is in Cleveland, Ohio.


In our legal system, every person is innocent until and unless found guilty by a court of law or a tribunal. Whenever we reference “allegations” or charges that are “alleged,” such allegations or charges have not been proven, and are merely accusations, not findings of fault, as of the date of the blog. We do not have, nor do we undertake, a duty to continue to monitor or follow cases about which we report, and/or to publish subsequent blogs regarding various developments that may occur in such cases. Readers are encouraged to conduct their own research regarding any such cases and any developments that may or may not have occurred in such cases.