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Owners of Pacific Property Assets/Apartments America Charged With Fraud

By George Miller of Shustak Reynolds & Partners, P.C. posted on Friday, February 7, 2014.

The FBI recently indicted Michael Stewart of Phoenix, Arizona, and John Packard, of Long Beach, California, for allegedly operating a massive real estate ponzi scheme fraud through their companies, Pacific Property Assets (PPA) and Apartments America, LLC (AA).  According to the SEC, which previously brought civil fraud charges against the alleged fraudsters, Stewart and Packard swindled investors out of more than $110 million by misrepresenting their companies’ financial condition to prospective investors in the period leading up to and following the 2007 real estate collapse.

While PPA and AA generally were not profitable, Stewart and Packard were able to take advantage of favorable market conditions to refinance and cash out the equity in various apartment buildings they owned through PPA and AA.  When the real estate market crashed, however, PPA filed for bankruptcy, indicating that it owed more than $90 million to investors.  Those investors received nothing in connection with the bankruptcy proceeding.

The FBI has accused Stewart and Packard of criminal fraud and of operating a Ponzi scheme, whereby purported returns to existing investors are paid from funds contributed by new investors. If you have been the victim of a Ponzi Scheme, or are involved in a Ponzi scheme “claw-back” case, please contact our firm to discuss the specifics of your case.

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