A USC lecturer who teaches at the university's business school was arrested Friday by FBI agents for allegedly bilking investors -- many of them his students -- out of more than $1.5 million and spending much of the money on show horses.
Barry Howard Landreth, 36, was arrested at the two-story home he rents in Orange County's gated Coto de Caza community on charges of wire fraud. Authorities said that he lured investors into a real estate investment scheme, promising them huge returns.
Landreth has been a part-time lecturer in real estate finance and development at USC's School of Policy, Planning and Development and the college's Marshall School of Business. Landreth, who graduated from USC in 2001 with a master's degree in real estate development, has been placed on administrative leave, said James Grant, a USC spokesman.
FBI agents said that Landreth told investors that their investments in Nevada and Illinois commercial properties and land would yield a 190% return.
Landreth deposited $718,000 of their money into his personal bank account, officials said. He used much of the remainder of the funds for personal expenses, prosecutors said, including $500,000 to buy and care for show jumping horses, a $73,000 Cadillac Escalade and $52,000 for brokerage accounts in his and his wife's names.
On Friday, Landreth appeared in federal court in Santa Ana. U.S. Magistrate Judge Robert N. Block ordered Landreth held at the Santa Ana City Jail and set bail at $500,000. A preliminary hearing was scheduled for April 7.
Landreth is the founder, president and chief executive officer of Webster Realty Investors Inc., a company started in 1995 that bills itself as a diversified real estate investment and development company with projects nationwide, according to the FBI.
In a 28-page affidavit, investigators said Landreth hired students to work as project managers at his company and paid them $100,000 a year to raise money to fund the "projects." The students persuaded their parents and others to invest in what they were told were commercial development projects in Las Vegas and Chicago, said FBI Special Agent Brad Howard.
Authorities said suspicions grew when investors did not get their returns, monthly investment statements failed to arrive and -- in at least two cases -- students were not paid. The FBI said that those two students, who invested $215,000 and worked for Landreth for nearly a year, discovered that the properties were owned by someone else. When they knocked on Landreth's door and asked for their money back, Landreth gave them excuses, the affidavit said.
Landreth allegedly drew up fake sales agreements and documents showing that he bought or owned the projects, Howard said. Landreth, he said, did not buy or own any of them. Landreth's attorney, James D. Riddet of Santa Ana, declined to comment, saying that he had not reviewed the evidence.
According to public records, Landreth was also under suspicion in 2004 in South Carolina after Myrtle Beach officials chose him to revitalize the Pavilion Amusement Park.
Landreth and his wife, Treena Gillespie, an assistant professor at Cal State Fullerton and president of her own consulting company, conducted focus groups with residents and business owners in South Carolina.
She faces no charges.
In January 2005, Landreth withdrew from the project amid questions about his background and finances, said Mark Kruea, a Myrtle Beach spokesman. Landreth denied a city-appointed committee's requests for his references and additional financial information, Kruea said.
Brochures Landreth distributed in South Carolina stated his company was worth billions, and, back in California, investors were told that it was worth $3 billion. Howard said the company had barely $200 in its bank account.
Times staff writer E. Scott Reckard contributed to this report.