CEO of Orange County Mortgage Lender Sentenced to 41 Months in Federal Prison in Ponzi Scheme
|FBI Los Angeles July 01, 2013|
SANTA ANA, CA—The CEO of an Orange County-based mortgage banking and financial services firm was sentenced today to 41 months in federal prison for operating a Ponzi scheme that collected more than $6.7 million from more than two dozen victims, announced Andrė Birotte, Jr., the United States Attorney in Los Angeles, and Bill L. Lewis, the Assistant Director in Charge of the FBI’s Los Angeles Field Office.
David Lee Hardin, Jr., 59, of Coto De Caza, who is the CEO and majority shareholder of a group of companies including Covenant Mortgage, Covenant Marketing, Covenant Debt Solutions, Covenant Insurance, and HRE Mortgage, was sentenced by United States District Judge James V. Selna. In addition to the prison term, Judge Selna ordered Hardin to pay $1.5 million in restitution. Judge Selna noted that such investment fraud schemes are prevalent in the Orange County area and that Mr. Hardin’s sentence was meant to serve as a deterrent to others.
Hardin pleaded guilty in March 2013 to mail fraud, admitting that his victims suffered losses of approximately $1.5 million.
From April 2007 through July 2010, Hardin solicited investments in a side venture related to his companies’ mortgage business. The investments were structured as loans to Hardin’s companies at fixed rates of interest. Hardin told the investors that their funds would be used to finance a home building project, to originate mortgages, and to fund his debt settlement business and that returns would be generated through home sales and fees from mortgage originations and debt settlement services. In reality, Hardin used a large percentage of the funds to make purported “interest” payments to earlier rounds of investors, in the typical pattern of a Ponzi scheme. He used other funds for personal expenses, including rent and car payments. Still other funds were used for operational costs of Hardin’s other businesses, including employee salaries and operating costs.
The criminal case against Hardin is the result of an investigation by the Federal Bureau of Investigation.
Assistant U.S. Attorney Joshua Robbins: 714-338-3500
U.S. Attorney’s Office Press Relations: 213-894-6947
FBI Press Relations: 310-996-3343