California Attorney pleads guilty to Multimillion-Dollar investment fraud scheme

California Attorney pleads guilty to Multimillion-Dollar investment fraud scheme

F.P. Report

WASHINGTON: Damian Williams, the United States Attorney for the Southern District of New York, announced that DEREK JONES, an attorney currently suspended from practicing law in California, pled guilty today to charges of carrying out a long-running wire fraud scheme, through which JONES defrauded investors out of at least $5.8 million. JONES is scheduled to be sentenced on February 23, 2022, before United States District Judge Loretta A. Preska, who accepted today’s plea.

U.S. Attorney Damian Williams said: “For many years, Derek Jones used fake documents and falsehoods to defraud innocent investors out of millions of dollars. Such investors have every right to expect that those promoting real estate deals and venture capital investments are treating them honestly and telling them the truth about their investments. Today, Jones admitted to violating those rights.”

According to the Indictment, statements made in court, as well as other publicly-filed documents in this case:

From at least 2012 through at least 2019, JONES solicited and obtained investments into various companies and investment funds he controlled, including purported real estate development and investment firms using variations of the names “BlueRidge,” “Living City,” and “Atiswin,” and the purported venture capital firm Realize Holdings (“Realize”).

In fraudulently inducing victims to invest in his funds, JONES routinely made materially false oral and written statements, including in glossy brochures and legal documents that contained lies about real estate purportedly owned or otherwise controlled by BlueRidge, Living City, and Atiswin. For example, JONES falsely told investors and prospective investors that BlueRidge was developing a “resort village” on land it controlled in Washington State, and separately that BlueRidge had purchased an existing hotel in that same location, when in fact neither BlueRidge nor JONES owned or controlled any of that property. In other cases, JONES falsely claimed that his companies were under contract to purchase a ranch in Colorado, and that his companies had leased various pieces of property slated for development. Instead, JONES misappropriated investors’ money, using much of it to make Ponzi-like payments to other investors to whom he owed money in connection with earlier transactions, and for personal and family expenses, including the private-school tuition of his children.

In executing his scheme, JONES also sent investors and others falsified and counterfeit documents. For example, on repeated occasions JONES provided doctored bank statements stating that he had millions of dollars in various corporate accounts, when in fact he had little or no money in such accounts. On other occasions, he provided counterfeit financial statements that falsely purported to be based on internal audits of companies that he controlled.

JONES defrauded investors—at least three of whom lived and/or transacted their banking in Manhattan—out of at least approximately $5.8 million. To prolong and conceal the fraud scheme, JONES regularly told lies designed to avoid meetings with or inquiries from victims. For example, in explaining his failure to respond promptly to questions or his reason for postponing meetings, JONES falsely told different investors, on different occasions, that one of his relatives was hospitalized and undergoing surgery. JONES also used the names of other individuals—without those individuals’ authorization or knowledge—to communicate via email with investors and thus foster the illusion that JONES’s businesses were viable operations with real employees.

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