Long Beach man admits to running $33M Ponzi scheme over 3 years

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Long Beach guilty of fraudJon Weldon James, 33, from Long Beach pleaded guilty to a federal wire fraud charge yesterday, in a case investigated by the F.B.I.

James, who solicited money using false claims of profitable real estate investments, defrauded more than 50 investors out of $33 million over 3 years says the US Attorney’s office. The El Segundo-based Ponzi scheme operated under a series of names, including J.W. James and Associates, Inc., and The Cloaking Device, Inc.

Appearing before United States District Judge R. Gary Klausner, James pleaded guilty and admitted that he defrauded individuals who bought into in his real estate-related investments from late 2003 through August 2006. James offered his investments through face-to-face meetings that included hosting presentations at restaurants, where he encouraged victims to invest their savings or money from their Individual Retirement Accounts.

James told victims that he was using their money to invest in real estate and even sent account statements that seemed to show profits to some investors. However, in actuality, James invested in only a few properties and made absolutely no profit from any real estate-related investments.

Then, in the hallmark of a Ponzi scheme, James used investors’ money to repay other investors who requested withdrawals of their funds. James also used investor money to pay for personal expenses, which included his wedding and an investment in a recording studio and production company called “On the Ball Entertainment.”

After taking in approximately $33 million from investors, repaying some investors and spending millions on personal and business expenses, James’s illegal conduct caused losses of approximately $11 million.

James is scheduled to be sentenced on May 24, and could face a maximum sentence of 20 years in federal prison.


One Response to “Long Beach man admits to running $33M Ponzi scheme over 3 years”
  1. smileylizard says:

    so much for the “American way”,