Orange County Real Estate Executive Found Guilty of Fraud
Michael J. Stewart, 68, of San Clemente was found guilty in federal court of 11 counts of mail fraud. It took the jury six hours to reach their verdict against a man who once had a thriving real estate investment firm. Stewart, co-owned the firm Pacific Property Assets (PPA) along with John J. Packard, 65 of Long Beach. Packard had earlier pleaded guilty to one count of fraud in exchange for his cooperation and testimony against Stewart.
PPA was founded in 1999 and took advantage of the strong real estate market. PPA would obtain bank loans and cash from private investors to buy fixer-upper apartment buildings in California and Arizona. After the properties were remodeled, they would then sell them for a significant profit. However, when the real estate market collapsed, so did PPAs profits. By 2008, PPA was losing an estimated $2 million per month.
The prosecutor argued to the jury that when PPA began to lose money, they resorted to lies and deceptions of the company's strength to keep the money flowing. Many of the investors were elderly people who lost their entire savings. In total, prosecutors alleged PPA became a ponzu scheme where they would seek new investors to pay back older investors. In total, it was testified that losses reached $170 million.
Stewart, faces up to 220 years in federal prison however, it is expected he will be sentenced to somewhere around 20 years. Packard, will not be sentenced until after Stewarts November 2, 2015 sentencing date. Packard also faces significant time but is expected to be sentenced to significantly less time than Stewart due to his cooperation with authorities.
White collar crimes, include a variety of different type of crimes from embezzlement, insurance fraud, stock fraud and ponzu schemes to name a few. If you are being investigated for a white collar crime, contact our office for a free consultation at (949) 558-0042.