Two Irvine men were charged Wednesday with running a property investment scam that bilked 65 individual and corporate investors out of $7 million between 1983 and 1986.
Richard Shane, 40, and James R. Anderson, 41, were charged with five federal counts of mail fraud for allegedly duping investors into buying worthless second trust deeds on private homes.
Assistant U.S. Attorney William Fahey said Anderson and Shane, operating through a Newport Beach investment brokerage firm, Equity Securities, offered investors returns of 20% per year on what they said were delinquent trust deeds.
Investors were told the trust deeds were secured by single family homes in Orange and Los Angeles counties, Fahey said, and that Equity Securities had bought the trust deeds during foreclosure or collection actions.
Belonged to Banks
But in most cases, the trust deeds belonged to banks and other financial institutions and had never been purchased by Equity Securities at all, Fahey said. They were fraudulently prepared to convince investors to turn over their money to the firm.
In other cases, investors never got a secured interest in the properties because the second trust deeds were never recorded, Fahey said.
But investors were given "loan packages" that purported to show their investments had paid off and Anderson and Shane persuaded them to allow them to re-invest their "earnings," the charges said.
The two men are scheduled to be arraigned Feb. 8. If convicted of all charges, they face prison terms of up to 25 years and fines of $5,000.