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Florence retirees say loan scam stripped them of millions
Lawsuits have been filed, and federal and state authorities are investigating what jilted investors are calling a Ponzi scheme
By Joe Mosley
The Register-Guard
FLORENCE — It’s been compared to Bernard Madoff’s now-infamous securities fraud case, but on a West Coast rather than international scale.
Dozens of Florence-area residents — most of them retirees — say they lost much if not all of their savings after investing in loans they were told would be secured by Southern California properties. In return for purchasing the loans, investors say they were promised twice-monthly payments and interest yields of 10 percent.
But their investments vanished in January, when the one-man California firm that arranged the loans — Sunburst Associates — abruptly went out of business, according to interviews and a pair of lawsuits filed in the case.
A Florence man who brokered most of the investments says he had little indication of any problems, and lost money on the loans himself.
Sunburst sold second trust deeds — ostensibly on expensive California homes — that were essentially second mortgages in which recipients borrowed money that had been pooled by private investors, rather than offered by a bank or other institutional lenders.
The loans are now being characterized in lawsuits and by investors as bogus, or as part of a Ponzi scheme, with no real estate to back them. Sunburst’s owner and the Florence broker both have been accused in the civil lawsuits of wrongdoing, but no criminal charges have been filed.
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