Purported Louisville Real Estate Entrepreneur Sentenced to 37 Months in Prison for Swindling Investors in Multi-Million-Dollar Scheme
|U.S. Attorney’s Office February 08, 2013|
LOUISVILLE—A purported Louisville real estate entrepreneur was sentenced in United States District Court today by District Judge Charles R. Simpson, III to 37 months in federal prison and was ordered to pay $2,797,000 in restitution for a single count of mail fraud connected to real estate schemes that resulted in the loss of more than $1 million to investors, announced David J. Hale, United States Attorney for the Western District of Kentucky. There is no parole in the federal system.
“The three year prison sentence is a well-deserved punishment for this fraudulent real estate scheme,” stated U.S. Attorney Hale. “My office and the Department of Justice will continue to pursue and prosecute investor fraud.”
On September 7, 2012, Russell N. Daniel, age 63, pleaded guilty to devising a scheme and an artifice to defraud investors in the defendant’s real estate business and to obtain money and property from investors by means of false and fraudulent pretenses, representations, and promises. Specifically, between March 1, 2005 and October 31, 2008, Daniel induced persons to invest in his real estate business by promising returns on investments ranging from 10-15 percent. Further, the defendant represented that money invested in his real estate business would be used by him to purchase, and on occasion, rehabilitate houses which in return would be sold for a profit.
In court, Daniel admitted that he solicited more than $700,000 to purchase houses purportedly located in Prospect, Shelbyville, Goshen, and Lexington, Kentucky, as well as Jeffersonville, Indiana, when in fact the addresses were fictitious. Daniel used the money received from investors in these fictitious transactions to fund unrelated matters, including using the investment monies to make payments of promised returns on unrelated investments.
Also, between December 28, 2006 and August 14, 2008, Daniel falsely represented to investors in properties located in Louisville, Pleasureville, and Lexington, Kentucky, that they would receive valid and legally enforceable mortgages on the properties, which would provide legal security for their investments, but Daniel instead provided investors with false and fictitious mortgages totaling more than $530,000, which contained the forged signature of the notary public.
In a separate incident, between March 23, 2005 and May 27, 2009, Daniel caused $35,000 to be invested with him by falsely representing to investors in two properties located in Louisville, Kentucky, that the investors would receive valid and legally enforceable first mortgages on the properties, which would provide legal security for their investments, when in fact, he did not provide investors with valid and legally enforceable first mortgages.
This case was prosecuted by Special Assistant United States Attorney James Lesousky and was investigated by the Federal Bureau of Investigation.