Tag Archives: wire fraud

Real Estate

Real Estate Motivational Speaker Heads to His Own Prison Cell

Jail Cell
New quarters for real estate author and motivational speaker.

Have you ever seen these ads that start out – make millions in real estate – you don’t need money, let me show you how to get started in real estate and earn a ton of money in the first month. Excuse me, if you can make millions in real estate using this “motivational speaker’s” techniques , then why is the guy even bothering to try to teach you his “sure why to get rich in real estate”?

I’ve been to one of these seminars. The guy showed up in a chauffeured limo, got out and he had diamonds on his fingers and so much gold jewelry that I was surprised he could walk. (I’m sure all the jewelry was fake) To make a long story short, every thing he said made no sense, but I noticed the people in the audience seemed to be buying his grubbily glop. I’m sure he made a lot of money selling his course and his books and tapes.

Well, here’s one “motivational speaker” from Texas, who hawked a book and infomercial on how to make money in real estate, who is  among eight people convicted of a multimillion-dollar mortgage fraud scheme. Eric Rulack Farrington Jr., 57, was president of Eric Farrington Seminars and Prestige Capital Corp., which did business as Farrington Mortgage Group.

A federal jury this week convicted Farrington of conspiracy to commit wire fraud, bank fraud, aiding and abetting, 15 counts of wire fraud and aiding and abetting, 10 counts of money laundering and aiding and abetting, five counts of engaging in a monetary transaction with criminally derived property and aiding and abetting.

Prosecutors said the eight defendants ran the scheme from March 2002 to January 2006. They found single-family residences for sale in the Dallas area, including distressed and pre-foreclosure properties, and negotiated a sales price. They created surplus loan proceeds by inflating the sale price, often using inflated appraisals.

“In some cases, they would create a bogus outstanding mortgage lien to be discharged,” prosecutors said. “They recruited individuals with high credit scores to act as borrowers and falsely represented to them that the property would be managed by the defendants and rented by a suitable tenant; that the mortgage, interest, taxes, insurance and property maintenance would be paid from the rental income; and the purchasers/borrowers would have no expenses. The borrowers had no intention to live in the property and did not have sufficient income to repay the loans.”

Conspiracy to commit wire fraud and wire fraud carries a sentence of up to 20 years in prison and a $250,000 fine. Bank fraud is punishable 30 years in prison and a $1 million fine. Money laundering is punishable by 20 years in prison and a $500,000 fine, and engaging in a monetary transaction with criminally derived property is punishable by 10 years in prison and a $250,000 fine.

The defendants also must forfeit $8.5 million. No sentencing dates have been announced.

Source: Court News Service

I guess while the group is in jail, they might read some books on real estate law, and maybe they can even read a book on ethics.  I doubt it, what do you think?

John J. O’Dell
Real Estate Broker
Looking to buy or sell?
Call today 530-263-1091

Real Estate

Reed Diehl Sentenced to 57 Months in Federal Prison

3 Comments
Reed Diehl
Reed Diehl

Reed Diehl, a former University of California lineman has been sentenced to 57 months in federal prison for his role in a $5 million Ponzi scheme. What’s with all these people getting away with Ponzi schemes?  Anyhow, 57 months in prison, $5 million take, equals a wage of $87,720 a month. Seems like a light sentence for stealing that much money.

According to an FBI press release in July of this year:

SANTA ANA, CA—A former player with the Tennessee Titans pleaded guilty this afternoon to federal fraud charges related to a $5 million Ponzi scheme in which he collected funds with promises of high rates of returns on investments in loan programs, including multimillion dollar condominium projects in Mexico.

Reed Kyle Diehl, 30, of Coto de Caza, pleaded guilty this afternoon in United States District Court to three counts of wire fraud and one count of money laundering.

According to a plea agreement in the case, Diehl falsely represented himself to potential clients as a banker who made “hard money loans” to businesses or individuals. Diehl also admitted that he fraudulently collected deposits for lines of credit for people who desired financing for construction and development projects in Mexico.

In relation to the “hard money loans,” Diehl told investors that he would pool their funds and make secured loans to individuals or businesses that had shortterm cash needs. Instead of using investor funds to make loans, he used investors’ money to repay earlier investors and to fund his lifestyle.

In relation to the second part of his scheme, Diehl told victims involved in construction projects in Mexico that he could secure multimillion dollar lines of credit. Diehl told one victim that it would cost $1.175 million to secure a $24 million loan and that the deposit would be used as collateral for the line of credit. The victim eventually paid Diehl $2.5 million, money that Diehl used to pay, among others things, other people who had made investments with Diehl. None of the victims ever obtained a line of credit through Diehl.

In his plea agreement, Diehl admitted that he caused losses of just over $5 million.

Diehl pleaded guilty before United States District Judge David O. Carter, who is scheduled to sentence the defendant on September 28. At sentencing, Diehl faces a statutory maximum sentence of 20 years in federal prison for each of the three counts of wire fraud and 10 years in prison for the money laundering count.

Diehl was initially charged and arrested in this case in March 2008. After being freed on bond, Diehl’s bond was revoked in January after he attempted to enter into a real estate transaction for a $3.5 million house using a false name and someone else’s social security number.

The investigation into Diehl was conducted by the Federal Bureau of Investigation.

Remember, if you are promised high returns on your money that seems too good to be true, yep, run for the hills.