One owner of an Orange County real estate company has agreed to plead guilty and another has been indicted for what federal prosecutors said on Friday to be a Ponzi scheme revolving around a real estate investment plan.
Brett Reed Barber, 42, of Costa Mesa was arraigned following his arrest on Thursday and is expected to be released on Friday, said Thom Mrozek, spokesman for the US prosecutor’s office. The trial date has been set for December 21.
Louis Alfonso Zimmerle, 62, of Sacramento, agreed in a plea agreement filed Thursday to admit one count of wire fraud, according to Mrozek.
The two are co-owners of BNZ Capital One LLC, based in Newport Beach.
The duo are also facing a complaint from the Securities and Exchange Commission filed Thursday.
The two have raised at least $ 13.5 million from around 105 investors since June 2019, according to the SEC.
The two promised annual returns on their investment of 10%, with Barber accused of assuring them “that their investments were safe and returns were guaranteed,” the SEC said.
âSince BNZ’s inception, however, BNZ has not been profitable because its investments – when Barber and Zimmerle actually invested – did not generate enough profit to repay the investor’s capital and pay the promised returns. “, according to the SEC. In fact, from June 2019 to February 2020, the defendants raised $ 6.9 million from investors, but only invested $ 2.7 million and generated less than $ 5,000 in profit from these. investments. ”
The two are accused of taking money from investors to reimburse other investors as part of a Ponzi scheme, prosecutors said.
âBarber and Zimmerle have also paid themselves generously with investor funds, including transferring hundreds of thousands of dollars to Barber’s company ‘Guaranteed Income Solutions Inc., according to the SEC.
After March of last year, they raised an additional $ 6.6 million while “misleading investors about the profitability of BNZ and continuing to make Ponzi-type payments to investors and make each other. lavish payments, âthe SEC asserted.
The company invested $ 6.4 million of the $ 13.5 million from real estate investors, generating just $ 300,000 in profit and using $ 1.7 million to pay other investors in the alleged scheme. Ponzi, the SEC said.
“And despite BNZ’s tiny profits, BNZ transferred over $ 1.6 million to (Guaranteed Income Solutions) and over $ 700,000 to Zimmerle, while also paying for some personal expenses of Barber and Zimmerle, including for vehicles, meals and travel, âthe SEC said. .
Barber also failed to tell investors that the Financial Industry Regulatory Authority prohibited him from working with a broker, prosecutors said.
Prosecutors say losses from the alleged scheme amount to around $ 9 million. Zimmerle admitted in his plea deal that he was keeping about $ 582,815 in investor money, prosecutors said.
Barber is charged with four counts of wire fraud and two counts of money laundering.