3 Charged With Defrauding Investors Out of $12 Million : Ponzi schemes: Ex-officers of the California Anchor Group allegedly used money to pay interest instead of putting it in real estate.
Three former officers of a Woodland Hills real estate investment company were charged Wednesday with defrauding more than 200 investors out of more than $12 million in a Ponzi scheme that ran for about three years before it collapsed, the U.S. attorney’s office announced.
According to prosecutors, the three men who operated California Anchor Group told investors that their money would be invested in real estate and earn interest of 25% or more a year.
Instead, prosecutors charge, each investor’s money went to pay interest to earlier investors, company operating expenses and the personal expenses of Alan R. Keranen, 42, formerly of Woodland Hills, president and owner of the company.
Keranen, who waived his right to have his case presented to a a grand jury, was charged by the U.S. attorney’s office with two counts of bank fraud and two counts of mail fraud.
Robert Duman, 36, of Simi Valley and Ronald Stoliar, 37, of Westlake Village, both former vice presidents of California Anchor, were charged in a grand jury indictment with a total of 31 counts of mail fraud, bank fraud and interstate transportation of fraud proceeds.
When Keranen founded the investment group in September, 1983, he was a high-level distributor for Amway, a direct-marketing company. Amway distributors make money by selling products directly to consumers and receive commissions from sales generated by people that they sponsor as distributors.
Assistant U.S. Atty. Anita Dymant said that Keranen, who now lives in Beaverton, Ore., used his reputation at Amway as a successful businessman to persuade people to invest in California Anchor Group. Many of the investors--who came primarily from the West Coast but also the Midwest--were also Amway distributors, Dymant said.
Dymant said the scheme collapsed after Keranen left the Amway organization March 2, 1987, after a dispute with other high-ranking executives.
After his split with Amway, Keranen could not attract new investors and the next round of interest checks sent out to investors bounced, Dymant said.
“The word spread like wildfire,” Dymant said. “There wasn’t money to make the payments and they never made the payments after that.”
California Anchor Group closed its doors for good May 11, 1987, the day the U.S. attorney’s office raided its Woodland Hills office.
According to the charges, the three men told investors that California Anchor could arrange for Individual Retirement Accounts to be invested in California Anchor and still qualify for tax deferral.
But Dymant said that California Anchor did not follow the proper procedures to do that, and so, when the scheme collapsed, investors also had to pay large tax bills and penalties to the Internal Revenue Service for taking money out of their IRAs.
Others who did not have money to invest were persuaded to take out second mortgages against their homes, which still must be repaid even though the money has been lost, she said. The defendants, who are scheduled to be arraigned June 25, face up to five years in prison on each mail fraud count, two years on each bank fraud count and 10 years for the interstate transportation count.
