Redding Hard Money Lender Pleads Guilty to Investment Fraud
|U.S. Attorney’s Office September 04, 2012|
SACRAMENTO, CA—Robert E. Rosenau, 45, of Redding, pleaded guilty today to one count of mail fraud, United States Attorney Benjamin B. Wagner announced.
This case is the product of an investigation by the Federal Bureau of Investigation and the Redding Police Department. Assistant United States Attorneys Jean M. Hobler and Jill M. Thomas prosecuted the case.
According to court documents, Rosenau was employed by and had management control of Rosenau Investments Inc., a hard money lender specializing in short term loans for real estate rehabilitation. Rosenau Investments obtained the money for loans from individual investors whose loans were associated with specific properties. Rosenau Investments told its investors that it did not loan money on properties with a loan to value ratio of over 70 percent and that it maintained a lien on the properties in a primary position.
In 2007, as the real estate market was in collapse, Rosenau Investments was having significant difficulty collecting payments from its borrowers and the properties it was lending on had little or no equity in them. Nonetheless, in January 2008, Rosenau told investors that the company was not having problems obtaining payments from borrowers and that there were new investment opportunities available. Because of these representations, two couples invested new funds with Rosenau Investments. In fact, their money was not related to new investment opportunities. In one case, the property at issue had already been foreclosed upon by Rosenau Investments when the borrower failed to pay on the loan. In the other case, the investors’ money was used for a loan on property owned by Rosenau through another company, and Rosenau had already obtained loans that greatly exceeded the property’s value. Moreover, Rosenau Investments did not have a lien on the property. Had the investors been aware of these facts, they would not have invested with Rosenau.
Rosenau is scheduled to be sentenced by United States District Judge William B. Shubb on December 3, 2012, at 9:30 a.m. He faces a maximum statutory penalty of 20 years in prison and a $500,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.