The ex-president and CEO of the Sherman Oaks-based Morgan Peabody Inc. brokerage and investment firm faces multiple years in federal prison for his part in a real estate investment scam that caused about five dozen investors to lose nearly $4 million.
David Williams, 54, of Studio City, a licensed securities dealer and investment adviser, pleaded guilty Monday to three counts of wire fraud and two counts of tax evasion in the midst of his jury trial in federal court.
Williams admitted that he directed Morgan Peabody representatives to sell securities in a fund that he personally had created, purportedly to invest in real estate.
Investors were told that the Sherwood Secured Investment Fund LLC, a Studio City business that Williams owned, would bring them a 9 percent annual return, according to the U.S. Attorney’s Office.
However, as he admitted in the plea agreement, Williams used the majority of investor money from the Sherwood Fund to pay for personal expenses, including a lease on a $6 million residence in Toluca Lake.
Between June 2007 and April 2008, Williams fraudulently obtained more than $3.75 million from about 60 investors as a result of the Sherwood Fund offering, according to federal prosecutors. Williams also admitted that he committed tax evasion by failing to file returns with the Internal Revenue Service for tax years 2007 and 2008, and failing to report the more than $2.3 million in income he received.
The defendant has agreed to pay additional taxes of nearly $778,000 for those tax years, as well as the civil fraud penalty and interest, prosecutors said.
Williams faces up to 70 years in federal prison when he is sentenced Sept. 28 by U.S. District Judge Dale S. Fischer, according to the U.S. Attorney’s Office.
— City News Service