A California man admitted in court this week that he ran a massive real estate Ponzi scheme and defrauded investors out of $24 million by falsely promising that he planned to use their money to purchase residential properties and either manage the properties for rental income or flip the properties and resell them for a profit.
According to the U.S. Attorney’s Office for the Eastern District of California, Seth Depiano pleaded guilty to mail fraud, wire fraud and money laundering in connection with running the Ponzi scheme.
Court documents showed that Depiano convinced real estate investors to give money to him and the businesses he controlled, including The Rental Group, US Funding and Home Services, and Draymond Homes.
The money was purported to be used to buy houses and make money of the properties, but Depiano admitted to taking the investors money under false pretenses and using it for his own gain.
According to the U.S. Attorney’s Office, in many cases, Depiano used documents that falsely represented high occupancy rates to promote the properties to investors.
Often, Depiano did not have the authority to buy or sell the properties in question and misled his investors with fraudulent documents that misrepresented the properties’ actual ownership.
In fact, some of the properties Depiano marketed to investors did not actually exist.
According to court documents, Depiano frequently used his investors’ money to pay his personal expenses, fund his gambling activities, and pay for the settlement of those same investors’ civil lawsuits against him.
Depiano also paid investors “rental income” that was actually money that other investors gave to Depiano for investment purposes.
In his plea agreement, Depiano admitted to defrauding investors out of approximately $24 million and agreed to pay restitution to approximately 28 investors.
Depiano also agreed to forfeit more than $700,000, and a baseball card collection valued at more than $31,000.
Depiano faces a maximum statutory penalty of 20 years in prison for the mail fraud and wire fraud charges, 10 years in prison for money laundering, and a $250,000 fine.