February 18, 2010 - A 33-year-old Long Beach man who operated a number of ventures that he used to solicit money with false claims of profitable investments in real estate has pleaded guilty to a federal wire fraud charge.
Jon Weldon James pleaded guilty yesterday afternoon to the federal offense related to his Ponzi scheme that collected more than $33 million from his El Segundo-based venture that operated under a series of names, including J.W. James and Associates, Inc., and The Cloaking Device, Inc.
Appearing before United States District Judge R. Gary Klausner, James pleaded guilty and admitted that he defrauded more than 50 individuals who invested in his real estate-related investments from late 2003 through August 2006. James offered his investments through face-to-face meetings that included hosting presentations at restaurants, where he encouraged victims to invest their savings or money from their Individual Retirement Accounts.
While James told victims that he was using their money to invest in real estate and sent account statements that purported to show profits to some investors, James invested in only a few properties and made absolutely no profit from any real estate-related investments. However, in the hallmark of a Ponzi scheme, James used investors’ money to repay other investors who requested withdrawals of their funds. James also used investor money to pay for personal expenses, which included his wedding and an investment in a recording studio and production company called “On the Ball Entertainment.”
After taking in approximately $33 million from investors, repaying some investors and spending millions on personal and business expenses, James’s illegal conduct caused losses of approximately $11 million.
James is scheduled to be sentenced by Judge Klausner on May 24, at which time he faces a statutory maximum sentence of 20 years in federal prison.
The case against James was investigated by the Federal Bureau of Investigation.
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