Developer with pricey home in Newport sentenced for swindling investors

An Arizona developer who paid for a multimillion-dollar home in Newport Beach, lavish vacations and other extravagant expenses using money he swindled from investors has been sentenced to 10 years in prison, according to federal authorities.

Judge Susan Bolton of U.S. District Court in Arizona sentenced John Keith Hoover, 64, on Tuesday after he pleaded guilty to 10 counts of wire fraud and one count of bankruptcy fraud.

Hoover’s wife, Deborah, 64, was sentenced Tuesday to one year of home confinement followed by five years of supervised release after being convicted of one count of conspiracy to commit bankruptcy fraud, according to the U.S. attorney’s office in Arizona.

Beginning in 1997, John Hoover used his profession as a homebuilder in Fort Mohave, Ariz., to lure investors to bogus real estate deals, according to his guilty plea. Court documents show Hoover took in more than $20 million that way.

“Hoover told investors their money would go to specific real estate developments and then diverted the money for his own personal use,” the U.S. attorney’s office said in a statement.

Hoover persuaded some victims to liquidate life insurance policies, mutual funds and Social Security benefits so they could invest, prosecutors said.

“This investment fraud was particularly reprehensible because it targeted a number of widows and other friends of the defendants who trusted the defendant’s investment and legal advice,” U.S. Attorney John Leonardo said in a statement.

Hoover put some of his victims’ money in high-risk housing ventures and used other funds on himself and his family, according to prosecutors.

He admitted to disguising junkets to Hawaii, China and Europe as business trips, according to prosecutors. He also paid for luxuries such as an apartment in Paris, jewelry, artwork and a $200,000 Bentley.

But the flow of cash eventually stopped, so Hoover and his wife filed for bankruptcy protection in 2011, according to court documents.

When federal agents arrested Hoover, they discovered that the couple had hidden assets from the bankruptcy court, prosecutors said.

According to his plea deal, Hoover has agreed to pay up to $42 million in restitution.