Northern California man gets 42 years for Ponzi scheme

Attorney General Kamala Harris Monday announced a 42-year prison sentence for a Northern California man who ran a Ponzi scheme that defrauded more than 400 investors, most of them elderly, out of more than $90 million.

James Koenig, 60, of Redding, owned Assent Real Estate Corporation (AREI) from 1999 to 2008.

The company specialized in the acquisition, management and resale of commercial property and elder care facilities.

Most victims of his Ponzi scheme were elderly individuals from the Bay Area.

Koenig was found guilty in May of 35 felony counts, including conspiracy, use of a scheme to defraud in connection with sales of securities, sales of securities by means of false statements and residential burglary relating to the sales of fraudulent investments.

The jury also found special enhancements for great takings because of the large amount of loss involved.

This individual ran a ruthless Ponzi scheme that robbed investors, including vulnerable elderly people, of their life savings, said Attorney General Harris.

The 42-year prison sentence represents justice given the severity of this crime and the deep impact on victims.

I commend the work of the Department of Justice attorneys and support staff who worked on this complex case.

Koenig did not inform investors that he had a prior federal conviction for mail fraud, which prevented him from getting favorable loan terms for his company.

He also did not disclose AREI's dire financial condition. Many of the investors were elderly and placed their life savings or home equity into the securities offered by Koenig.

The company's early losses were managed by using the funds of new investors to pay off the original investors.

By 2007, AREI had accumulated $163 million in debt that was unsecured or significantly undersecured and required monthly payments of more than $1.8 million to maintain.

In April 2007, AREI stopped making payments to investors, while continuing to solicit and sell securities to new investors.

The Ponzi scheme finally failed in the spring of 2008.

The case was based on 32 of the more than 400 victims, whose losses exceeded $8 million $3.8 million of which came from investments made after April 2007 when AREI stopped paying its current investors.

At the time of sentencing, the total losses by victims were reported to be in excess of $90 million.

Koenig was sentenced in Shasta County Superior Court on Friday.

A restitution hearing will occur at a later date.

Source: http://www.redbluffdailynews.com/ci_23759080/northern-california-man-gets-42-years-ponzi-scheme?source=rss_viewed

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