The main alleged conspirators of a $ 14 million real estate investment program, Louis Zimmerle and Brett Barber, were arrested on October 28. Zimmerle and Barber are Orange County business owners and former real estate agents.
The scheme began in 2012, when Barber was questioned by the Financial Sector Regulatory Authority (FINRA) as part of an investigation into his dubious business activities. After his failure to appear, FINRA subsequently barred Barber from acting as or partnering with him.
As a result of this disciplinary action, the California Department of Business and Oversight denied Barber’s firm, Mission Advisory Services, a certificate as an investment advisor in 2015. The department also banned Barber from holding all senior positions. ’employment, management and control related to an investment adviser, securities broker. or commodity advisor.
Barber and Zimmerle subsequently registered their limited liability investment company BNZ Capital One in 2019. This protected their assets against possible claims against the company.
Operating as BNZ Capital One, Barber and Zimmerle offered investment opportunities for buying and turning over properties in real estate and land development. The pair pledged 10% annual return to their investors and reportedly failed to disclose Barber’s previous sanctions.
As of June 2019, BNZ has acquired around 105 investors and raised a minimum of $ 13.5 million. However, Barber and Zimmerle only invested $ 6.4 million of those funds. The majority of the money funded the returns of previous investors and another company owned by the pair, Relief Defendant Guaranteed Income Solutions, Inc. (GIS).
According to allegations by the United States Securities and Exchange Commission (SEC), âBNZâ¦ generated barely $ 300,000 in profits and paid out at least $ 1.7 million in Ponzi-type payments to investorsâ¦ despite the BNZ’s low profits, BNZ transferred over $ 1.6 million to SRG and over $ 700,000 to Zimmerle, while also paying for some personal expenses of Barber and Zimmerle including vehicles, meals and travel .
On arraignment, Barber pleaded not guilty to four counts of wire fraud and two counts of money laundering. If convicted, Barber could face up to 30 years in federal prison. His current bail is set at $ 800,000 and his trial is set for December 21.
Zimmerle pleaded guilty to his indictment on one count of wire fraud, in which he confessed to the personal acquisition of $ 582,815 in investor funding.
In addition to their charges, the couple also face a civil lawsuit filed by the SEC.
“The complaint here alleges that when the defendants did not make sufficient profit to pay investor returns, they made Ponzi-type payments to investors using money from other investors and, separately, also used investor funds to pay themselves generously, “SEC Los Angeles regional office manager Michele Wein Layne said. âThose who engage in such misconduct should be expected to be held accountable by the SEC. “
Erin Boshers is an intern at City News for the fall term of 2021. She can be contacted at [email protected].