Long beach Ponzi scheme leader sentenced to 78 months in prison, $11-million levy
A 33-year-old Long Beach man, who admitted to running a Ponzi scheme that collected more than $33 million from investors, was sentenced to 78 months in federal prison Monday, federal officials said.
In addition to the prison time, a U.S. district judge ordered Jon Weldon James to pay $11,172,412 in restitution to his more than 50 victims, according to a statement from the U.S. attorney's office.
James pleaded guilty in February to one count of wire fraud, promising a couple an annual return of 20% on a real estate investment of about $500,000, the statement said.
In his plea agreement, James also admitted to defrauding more than 50 other investors between late 2003 and August 2006, the U.S. attorney's office said.
James ran the scheme through multiple businesses, operating under different names such as J.W. James and Associates Inc. and the Cloaking Device Inc., gaining investors through word-of-mouth methods, the statement said.
Throughout the scheme, James only purchased five pieces of real estate, none of which ever generated any profits for investors, the statement said.
The real estate was only acquired "after the California Department of Corporations began looking into complaints about James in November 2005, which was more than two years after James began accepting money from investors," the U.S. attorney's office said.
Investor funds were instead used to repay other investors who requested withdrawals of their money and for James' personal expenses, including his wedding at the St. Regis Monarch Beach resort in Dana Point, the statement said.
About $900,000 was also used to build a recording studio and fund a related production company called On the Ball Entertainment, the U.S. attorney's office said.
-- Nathan Olivarez-Giles