Most people would think they are making a smart decision hiring a friend as a real estate agent. But 34 people found out the hard way that you can’t always trust your friends. In Irvine, California, an agent was caught in a real estate fraud scheme worth more than $4 million.
David Sparks, a real estate broker from California, invested his own money along with investor funds from his family and friends into a real estate project beginning in the late 1980s. Sparks began investing heavily in real estate projects in Cedar City, Utah on a speculative bet that the property values would dramatically rise over the coming years.
Sometime around 2007, Sparks’ investment properties were losing more money than they were making, and he was unable to make scheduled debt payments with collected rents. That’s when he turned to investors for more money rather than coming clean about the investment losses. Of the $4.8 million he was able to raise, he distributed $500,000 back to investors as investment gains and sunk the remainder into debt payments, which were ultimately not enough to save the project.
Because Sparks used a position of trust and his extensive real estate knowledge to in this fraud, a Federal judge sentenced him to 15 months longer than a plea deal with prosecutors. Sparks reported to prison in 2012 to begin his 6 and a half year sentence followed by three years of probation.
Read the whole story at the Orange County Register.