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Ponzi scheme a cautionary tale for Encino real estate investors

While the majority of real estate agents are trustworthy individuals with the best interests of buyers and sellers in mind, there is no shortage of corrupt brokers who take advantage of innocent people, sometimes ripping them off for millions of dollars. That was the scenario described in a recent real estate fraud case heard in Los Angeles.

A real estate broker admitted to orchestrating a Ponzi scheme that defrauded investors of almost $2.3 million. In 2007 and 2008, the woman lied to investors by telling them that their money would generate high rates of return as part of a real estate program. However, instead of spending the money as promised, the agent used the funds to pay employees, personal expenses and previous investors.

Dozens of people in California and Arizona fell victim to the scheme. Now the real estate agent, who will likely plead guilty this month, could go to federal prison for 20 years.

One particular investor said the defendant promised him that, if he invested quickly, she could use the money to buy unfinished condominiums at a low rate. The man took out a loan against his own home to make an investment of $500,000, which he lost completely.

This story is a cautionary tale for Encino residents who are considering a real estate transaction. To prevent litigation and avoid being defrauded, buyers and sellers alike would do well to consult with a real estate attorney with experience in detecting fraud and concealment. Failing to perform the terms of a purchase agreement is a serious matter, and having a legal professional on your side is the surest way of protecting your interests.

Source: NBC Los Angeles, "Plea Agreement in $2.3M Real Estate Ponzi Scheme," Jason Kandel, Oct. 16, 2012

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