41 Months plus $2.5 MM for Ponzi Scheme

 Brenda A. Eschbach, 55, owner of Aventine Investment Services and EMA Investment Properties, Santa Ana, California,  received a 41 months imprisonment for money laundering and mail fraud, announced the United States Attorney’s Office, Internal Revenue Service – Criminal Investigation and the Federal Bureau of Investigation.

She also was ordered to pay $2.5 million in restitution by United States District Judge James V. Selna. Eschbach previously pleaded guilty to one count of money laundering and one count of mail fraud.

According to the plea agreement filed in court, from 2007 to November 30, 2009, Eschbach engaged in a scheme to defraud millions of dollars from investors. Through her companies, Eschbach convinced investors to invest in a real estate investment trust, KBS Capital Markets Group (KBS). Eschbach also misled investors by telling them she earned a Ph.D. from the University of California, Irvine when she in fact didn’t have a Ph.D. from anywhere.

In furtherance of her scheme, Eschbach mailed investor statements showing that investor’s money was invested and earning a profit. In relation to the mail fraud count, on December 31, 2007, Eschbach mailed a fabricated account statement to an investor, reporting a $1.3 million investment which didn’t occur.

Instead of investing, Eschbach used investor funds to pay off other investors in a Ponzi-like fashion and for her own personal use. Eschbach admitted that she misappropriated more than $2.5 million in total from investors.

In a related case, the U.S. Securities and Exchange Commission announced Wednesday that on February 14, 2012, it filed a civil injunctive action in the U.S. District Court for the Central District of California charging Eschbach with securities fraud, investment advisory fraud, and acting as an unregistered broker-dealer. In its complaint, the Commission alleged that Eschbach misappropriated over $3 million in investment advisory client funds from 2003 through 2009.

In the related case, Eschbach also consented to the issuance of a Commission Order barring her from association with any broker, dealer, investment adviser, municipal securities dealer, or transfer agent, and from participating in any offering of a penny stock. Issuance of such an Order is predicated on entry of the proposed injunction against Eschbach and her plea of guilty in the federal prosecution.

The investigation was conducted by the U.S. Securities and Exchange Commission, Internal Revenue Service – Criminal Investigation and the Federal Bureau of Investigation.