Former Carmel Real Estate Broker Charged in $16 Million Golf Course Investment Fraud Scheme

Defendant Defrauded Investors in Unsuccessful Attempt to Complete Jack Nicklaus Designed Golf Course and Host PGA Tour Event

SAN JOSE, CA—A former Carmel real estate broker who allegedly defrauded numerous private investors out of $16 million in connection with a golf course development scheme was arrested and arraigned yesterday afternoon on 32 counts of conspiracy, wire and mail fraud, and money laundering, United States Attorney Joseph P. Russoniello and Monterey County District Attorney Dean D. Flippo announced.

According to the indictment, which was filed in San Jose federal district court on July 22 and unsealed yesterday afternoon, Thomas Joseph O’Meara, 63, carried out an investment fraud scheme from 2004 through 2007. O’Meara, formerly a Carmel resident now living in Palm Desert, Calif., and his business partner were both licensed California real estate brokers until September 2008.

The indictment alleges that in 2003 O’Meara began developing an 18-holf golf course and housing development that he marketed as the Running Horse Golf and Country Club (the Running Horse Development). O’Meara planned to construct the golf course and country club with an adjoining 780 residential homes inside a gated community in southwestern Fresno, California.

According to the indictment, O’Meara retained the firm Nicklaus Design, owned by the professional golfer Jack Nicklaus, to design the 18-hole golf course at the Running Horse Development. Based on representations made to them by O’Meara, Jack Nicklaus and other members of the Nicklaus Design team attended a press conference at the proposed Running Horse golf course in January 2006. The indictment also alleges that, in reliance upon O’Meara’s representations, the PGA Tour publicly scheduled a PGA Tour golf tournament called “the Running Horse Classic” that was to have taken place on the Running Horse golf course in October 2007 with a purse of $4.5 million.

The indictment alleges that O’Meara spent all loan money he had obtained from commercial lenders and began marketing the Running Horse Development as an investment opportunity to private investors. O’Meara and others acting on his behalf conspired to solicit more than $16 million in private individual investors at a time when they knew, but failed to disclose, that the project was in poor financial condition and faced numerous, substantial obstacles to completion. O’Meara allegedly diverted, and directed others to divert, some private investors’ funds for his own personal gain without permission of the investors, including the payment of property taxed owed on O’Meara’s personal property.

The indictment further alleges that in order to obtain private investor monies, O’Meara, and others acting on his behalf, falsely stated that the Running Horse Development had acquired all the property necessary to complete the golf course and adjoining residential development, and that the golf course was close to completion. In reality, the Running Horse Development had been unable to acquire all of the required property to complete the golf course and the golf course was never close to completion. Construction on the Running Horse Golf Course halted in mid-2006, and only two of the 18 proposed holes were ever completed.

The indictment also alleges that O’Meara and others acting on his behalf used false promises to induce investors, including falsely promising them that their principal was guaranteed and that they would receive rates of return as high as 20 percent annually and/or “investment bonuses” as high as 30 percent for a three-month investment. In reality, O’Meara did not handle investors’ money in a manner that would guarantee their principal, nor did he deliver investors either the promised high rates of return or investment bonuses. The indictment also alleges that O’Meara and others induced victims to invest by falsely telling them that the Running Horse Development was in good financial condition, when in fact O’Meara and others acting on his behalf knew it suffered from consistent cash flow problems, had defaulted on more than $10 million in loans from commercial lenders, and several of those commercial lenders had filed notices of default against the Running Horse Development in 2006.

The indictment further alleges that O’Meara and others acting on his behalf induced victims to invest by falsely claiming that Jack Nicklaus Design and the PGA Tour were confident in late 2006 about the progress of the Running Horse Development and confident that the proposed golf course would be completed in time to host the publicized PGA Tour event in October 2007. In fact, O’Meara and others acting on his behalf knew that Nicklaus Design had ceased work on the project in June 2006 due to non-payment of fees, the PGA Tour as of mid-2006 had expressed serious concerns about inadequate progress on the golf course, and that the Running Horse Development was not on track to complete the golf course, let alone host a 2007 PGA Tour event.

According to the indictment, O’Meara and others also induced victims to invest by falsely telling them that the City of Fresno was about to provide the necessary final authorizations and approvals to complete the Running Horse Development, when in fact O’Meara and others acting on his behalf knew that these final authorizations and approvals were not forthcoming and that the City of Fresno had also not legally authorized O’Meara to offer to sell and sell lots within the Running Horse Development.

The indictment alleges that O’Meara and others induced victims to invest by falsely promising them that investments were secured by deeds of trust granting them a preferred position on specific lots located within the Running Horse Development. In reality, many investors never received a recorded deed of trust as promised and others received deeds of trust that provided inadequate security. In some cases, investors unknowingly received deeds of trust for an interest in a planned ponding basin outside the Running Horse Development, a parcel which O’Meara did not entirely own and which he was already using for security for numerous other Running Horse investors.

The indictment alleges the Running Horse Development ultimately failed and commercial and private investors lost their investments. No residential units were ever built on the proposed locations within the development the Running Horse Development. The 450 Fresno-area acres on which the Running Horse Golf and Country Club was to have located remain largely undeveloped. No PGA Tour event took place at the Running Horse property in October 2007.

The Federal Bureau of Investigation arrested O’Meara yesterday morning in Palm Desert, Calif., pursuant to a sealed arrest warrant. O’Meara made his initial appearance in a federal court in Riverside, Calif. yesterday afternoon before United States Magistrate Judge Oswald Parada, where he was ordered released subject to a $100,000 unsecured bond and placed on electronic monitoring and home detention. O’Meara is scheduled to make his initial appearance in San Jose before United States Magistrate Judge Patricia V. Trumbull on Friday, Aug. 6, at 9:30 a.m.

The maximum statutory penalty for each count of conspiracy to commit wire and mail fraud, wire fraud, and mail fraud in violation of Title 18, United States Code, Sections 1349, 1343, and 1341 is 20 years in prison and a fine of $250,000, or twice the gross gain or loss, whichever is greater, plus restitution. The maximum statutory penalty for each count of money laundering in violation of Title 18, United States Code, Section 1957 is 10 years in prison and a fine of $250,000 or twice the gross gain or loss, whichever is greater. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

The attorneys prosecuting the case are Assistant United States Attorney Joseph Fazioli and Special Assistant United States Attorney/Monterey County Deputy District Attorney John Hubanks with the assistance of Legal Assistant Kamille Singh. The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service – Criminal Investigation.

Please note: An Indictment contains only allegations against an individual and, as with all defendants, O’Meara must be presumed innocent unless and until convicted.