SANTA ANA, Calif., Sept. 9, 2016 (Gephardt Daily) — A Utah man has been arrested for alleged real estate fraud in connection with a case that cost California investors nearly $3.5 million.
Shawn Patrick Watkins, 46, of Layton, was taken into custody on Sept. 1 when he surrendered to FBI agents in Orange County. Watkins had been charged with mail fraud, wire fraud and money laundering in a nine-count indictment returned on Aug. 17 by a federal grand jury.
A news release from the U.S. Attorney’s Office in Los Angeles said Watkins and others allegedly offered investments in a company known as The Equity Growth Group (TEGG) between approximately 2007 through 2014.
According to the indictment, the victims were solicited during seminars in Orange County hotels offered by Investor Workshops, Inc., in which Watkins presented himself as an expert in the field of real estate investment. In order to lend credibility to the scheme, Watkins allegedly attempted to gain trust by telling investors that he was formerly employed as a law enforcement officer.
The news release said: “As part of the solicitations, Watkins made omissions and false promises to investors. For example, the indictment alleges that Watkins falsely told investors that TEGG controlled hundreds of properties that generated rental income and TEGG would continue its growth by acquiring new properties. Watkins led investors to believe that they would receive substantial interest payments or that their money would be secured by collateral through the filing of deeds of trust on properties.”
In reality, the news release adds, over the course of the several years, until the scheme collapsed in the spring of 2014, TEGG was not acquiring new properties and had a negative cash flow. Investor money was not used to acquire new properties, nor was it secured by collateral, and many victims did not receive interest payments. In fact, money that was paid to some victims as purported interest or a return on their investment came from investments made by other victims.
Over the course of the scheme, more than 50 investors lost approximately $3.4 million with TEGG, the indictment alleges.
If convicted of the nine charges in the indictment – four counts of mail fraud, two counts of wire fraud and two counts of money laundering, Watkins would face a statutory maximum penalty of 180 years in federal prison.
“This defendant took great pains to lend legitimacy to his scheme, such as holding elaborate seminars and presenting himself as an expert investor,” said U.S. attorney Eileen M. Decker. “But, as we see all too often, the false claims were designed to support a Ponzi scheme that took money from unsuspecting victims for a number of years. We are committed to seeking justice in these cases and doing whatever we can to recover money lost by victims to such schemes.”
Deirdre Fike, the assistant director in charge of the FBI’s Los Angeles Field Office, said anyone who believes they may have been targeted by the defendant is urged to contact the FBI. “Mr. Watkins greatly overstated his relationship with law enforcement as a way to gain the trust of investors, only to get the attention of law enforcement by stealing their money,” Fike said.
Watkins was arraigned on the indictment on Sept. 1 and entered not guilty pleas to the charges. He was ordered freed on a $35,000 bond and was ordered to stand trial on Oct. 25 before U.S. District Judge Cormac J. Carney.
Investigators believe Watkins may have been involved in another investment scheme and may have victimized investors in Utah, California and possibly other states. Anyone who may have invested money with Watkins and believes they may be a victim of fraud is urged to contact the FBI’s Los Angeles Field Office at 310-477-6565.
The investigation in this case was conducted by the Federal Bureau of Investigation. The case is being prosecuted by assistant U.S. attorney Gregory W. Staples of the Santa Ana branch office.