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California charges six with $52 Million Ponzi scheme
• Sham real estate projects alleged
• ‘Callously conned hundreds of people’
Six men have been charged with bilking hundreds of people out of $52 million in an Orange County-based Ponzi scheme, California Attorney General Edmund G. Brown Jr. says.
More than a thousand people, including retired senior citizens, were swindled through sham real estate projects, using the investors’ money to buy planes, expensive cars and lavish vacations, the attorney general says.
“These six men callously conned hundreds of people into investing $52 million into a company that they treated as their personal bank account,” says Mr. Brown. “They fraudulently took investors’ money and spent it on an array of luxury items, relying on a Ponzi scheme to keep investors at bay.” 


From 2001 to February 2006, Irvine-based Carolina Development Company peddled $52 million worth of stock to more than a thousand investors. The company claimed the proceeds would be used to buy and develop luxury resorts and upscale communities adjacent to golf courses designed by Arnold Palmer, Jack Nicklaus, and Greg Norman. Investors bought anywhere from $15,000 to $1 million in stock, including senior citizens who invested their retirement funds, the state says.
The company bought some land, but did nothing to develop it, despite its claim that 85% of the $52 million invested would be used for land acquisition and development, says the complaint.
To persuade investors to buy shares of Carolina Development Company, the defendants claimed that Arnold Palmer had partnered with them, Mr. Brown says.
The defendants also promised that investors would reap huge dividends and assured those who invested a minimum of $100,000 that their investment would be secured by deeds to specific parcels of land, says the complaint. None of these claims were true.
The defendants diverted more than $24 million for extravagant bonuses, personal medical bills, airplanes, fancy meals, BMWs, concert tickets and luxury vacations, the attorney general says.
To keep investors at bay, the defendants engaged in a Ponzi scheme, paying some investors “returns” on their investment using money from the new investors, he says.
The U.S. Securities and Exchange Commission (SEC) in 2007 won a $29.2 million judgment against the president of the company and a $2.1 million judgment against a vice president of the company.
Hampton Roads Lawyers , Tulsa Lawyers
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Portland Lawyers
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S.E.C. Report Details Lapses i
