A California woman who once hosted a financial talk radio show was convicted by a federal jury of operating a $4 million real estate Ponzi scheme. Barbra Alexander, 66, was convicted of twenty-eight fraud counts in connection with the scheme, and is the third co-conspirator to be convicted. Alexander was indicted back in October 2010 along with Michael Swanson and Beth Pina on forty-three counts of mail fraud, securities fraud, money laundering and conspiracy.
Alexander previously served as producer of the syndicated radio show "Money Dots," which aired locally in Monterey, California. She and her partner, Swanson, also owned and operated APS Funding, Inc. ("APS Funding"), which held itself out as a real estate investment company that specialized in short-term hard-money loans. The trio recruited investors through personal referrals and word-of-mouth campaigns, promising 12% annual returns from short-term loans on real estate that would be secured by recorded deeds of trust. In total, nearly $7 million was raised from investors.
However, of the approximately $6.7 million raised, at least $2.5 million was diverted to Alexander, Swanson, and Pina. These funds were used to support the trio's radio show, and also to provide monthly salaries of $10,000 - $15,000 to each co-conspirator. Ironically, at least $200,000 of investor funds were used by Alexander for an extensive kitchen remodel - after which a house party was held that was attended by investors unaware that their principal had funded the remodel.
Nor were the actual returns realized by APS Funding commensurate with the returns promised to investors. For example, in 2009 the various entities each paid out higher amounts than their actual income - funding the difference with new investor contributions in a classic hallmark of a Ponzi scheme. Indeed, when the scheme began to unravel in late 2009, the funds' records showed total investor balances of nearly $7 million despite the fact that each of the various bank accounts held by the funds held negative balances.
Swanson was previously convicted in a September 2013 trial, while Pina pleaded guilty to to conspiracy to commit mail fraud and conspiracy to commit wire fraud in December 2012. With Alexander's conviction, sentencing for Swanson and Pina has been scheduled for May 14, 2014.
A copy of the October 2010 indictment is below:
The October 2010 indictment
For more news and analysis of Ponzi schemes, visit Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.
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