An alleged real estate fraud scheme built on greed
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News item from your government today: ‘The Securities and Exchange Commission today filed securities fraud charges against the promoters of a real estate investment scheme targeting the African-American community in the
In short, the alleged scheme was this: An Altadena woman named Jeanetta M. Standefor, through a Pasadena company called Accelerated Funding Group, operated an allegedly fraudulent ‘foreclosure reinstatement’ scheme. More than 600 people invested $18 million in the scheme between 2005 and 2007, believing they could reap returns of up to 50% within 30 to 45 days, the SEC says. Investors were led to believe that their wildly profitable investments would also help distressed homeowners avoid foreclosure.
The SEC press release alleges this was the crudest, most primitive kind of financial fraud: There was no ‘foreclosure reinstatement’ program at all. It was just a ponzi scheme -- you ‘invest’ money with me, and later I give some of it back to you, telling you that is your profit. I raise more money and pay some of it back as ‘profit’ to the new investors, keeping some of that money too. It’s not complicated: I raise money and keep some of it. I don’t invest any of it in anything.
From the SEC: ‘Standefor also used more than $1.9 million of investor funds for personal expenses such as her lavish wedding and honeymoon, cars, jewelry, tickets to entertainment event and home renovations. Standefor and AFG also misused investor funds to pay $121,000 in ‘consulting fees’ to Standefor’s husband Darrell R. Dansby.’
My attempts to reach Standefor for comment at Acclerated Funding Group were unsuccessful. The company still has a working phone line, but it goes to voicemail and the mailbox is full.
Bloviation: This is a bit harsh, but I’ll say it anyway: The investors in this case may have been defrauded, but they were chasing a really silly dream. Anyone who believes they can make an investment relating to foreclosure, and then get a return of up to 50% within 30 to 45 days, is asking to be separated from their money. There’s a name for that kind of thinking: greed.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.