Real Estate Developer Charged with Swindling Investors in $2 Million Ponzi Scheme
CHICAGO—A Florida businessman has been charged in federal court with running a Ponzi scheme involving the sale of bogus investments in his real estate development company.
RICHARD L. THOMPSON, 60, induced investors to purchase shares in his real estate development company, Latten Management LLC, and to personally loan him money, on the false premise that his company owned more than two hundred acres of property in Tennessee, according to a criminal information filed Tuesday in U.S. District Court in Chicago. Thompson took in approximately $2.1 million in the scheme, including $125,000 from an investor in west suburban Naperville, who purchased shares in Thompson’s company with funds from a retirement account, the information states.
Thompson, of Sarasota, Fla., was charged with one count of wire fraud. He will make an initial appearance before U.S. Magistrate Judge Maria Valdez on a date to be determined by the Court.
The information alleges that Thompson founded Latten Management in Florida in 2007 to develop vacation properties in Tennessee. Thompson personally purchased 54 acres of land in an area known as Green Mountain, and 15 acres in an area known as Green Ridge Park, according to the information. There were mortgages on both properties, and Thompson kept title in his name without ever transferring them to Latten Management, the information alleges.
Thompson and other individuals later purchased 217 acres, known as Catawba Peak, in another area of Tennessee, with Thompson guaranteeing payment for the mortgage loan, the information states. Thompson and the other owners defaulted on the loan when full payment came due in approximately February 2009, leaving a debt of approximately $9.8 million, according to the information. Latten Management never owned the Catawba Peak property, the information states.
From early 2009 until April 2011, Thompson offered and sold shares in his company by telling investors that it owned the three properties in Tennessee, and that the company would develop them into vacation destinations, according to the information. Thompson gave tours of Green Mountain, Green Ridge Park, and Catawba Peak to investors, but concealed the fact that Latten Management didn’t own the properties, according to the information. The information further alleges that Thompson concealed the fact that he and the other individuals had defaulted on the Catawba Park loan. In fact, Thompson knew that Latten Management did not own any real property, and that the investors’ shares in the company were not secured by any property, the information charges.
According to the information, Thompson caused losses to Latten investors of approximately $1,652,000. Thompson misappropriated a substantial portion of investors’ funds to pay for his own personal expenses, including his home mortgage, his family’s credit cards, electric bills, college tuition, life insurance, and a Lexus, the information states.
In order to conceal his scheme, Thompson had to continually obtain new funds in order to satisfy his existing obligations to repay investors through Ponzi-type payments, according to the information. He also publicly filed false documents with the Securities and Exchange Commission, and intentionally misled investors about the status of their investments and loans, the information charges.
One of the duped investors lived in Naperville, according to the information. That investor transferred $125,000 in personal retirement savings to an account in Sarasota to purchase shares in Latten, according to the information.
In addition to the investments in Latten shares, Thompson also fraudulently obtained approximately $667,000 in personal unsecured loans from individuals by falsely representing that he would use their money to cover costs associated with developing Latten projects, according to the information. These personal loans were evidenced by promissory notes signed by Thompson, who promised to repay them with interest, even though he knew he did not have the financial ability to do so, the information states.
Thompson used a portion of the personal loans to pay for his own expenses, and to repay some of the Latten investors, according to the information. This part of the scheme resulted in a loss of approximately $500,000 to the individuals, the information states.
The information was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and Robert J. Holley, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation.
If convicted, Thompson faces a maximum sentence of 20 years in prison, and a maximum fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greater. The Court would determine the appropriate sentence to be imposed under the advisory United States Sentencing Guidelines.
The public is reminded that an information contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
The government is being represented by Assistant United States Attorney Jacqueline Stern.