A San Gabriel con man who went on the lam after skipping his sentencing hearing for defrauding homeowners out of as much as $10 million was sent to federal prison Thursday for more than eight years.
David Kaup, now 31, was initially scheduled to be sentenced in December 2012 in U.S. District Court in Los Angeles after pleading guilty to two counts of wire fraud, but failed to appear in court. He was arrested a year later in Las Vegas, where he was living under an alias.
U.S. District Judge Margaret M. Morrow sentenced Kaup to eight years and four months in federal prison, followed by a three-year term of supervised release. She also ordered Kaup to pay more than $10 million in restitution to the victims he defrauded.
Kaup’s attorney, Raoul Severo, unsuccessfully argued for a 60-month sentence, telling the judge that his client had fled prior to sentencing last time because he feared one of the investor-victims would show up in court and harm him. Severo also said that Kaup had drug and alcohol problems that clouded his judgment.
Assistant U.S. Attorney James Bowman countered that the defendant did not appear to feel threatened during the three years he was free on bond prior to the skipped 2012 hearing.
Morrow mentioned that Kaup’s family members had written to the court, telling the judge that the defendant’s gambling addiction was apparently at the root of his fraud operation.
In a brief statement to the court, Kaup addressed one of his victims, who had earlier told the judge of losing about $50,000 in the mortgage con.
“I just want to say I’m very sorry,” Kaup said. “I made my mistakes … I’m going to have this haunt me for the rest of my life. I just had this idea of producing loans, and it didn’t work out.”
Kaup admitted that he defrauded more than 50 families out of more than $10 million over a period of about five years. Some of the victims were working- class families that sought Kaup’s assistance in refinancing their homes.
Kaup operated American Loans and Funding as well as two other businesses in which he falsely promised victims he could refinance their homes at low interest rates and invest their money.
The scheme “had serious consequences for the victims,” Morrow said, adding that those who had been defrauded included senior citizens and parents of disabled children.
“As long as he’s out, he’ll keep doing this sort of thing,” Bowman told the court.
In 2012, once it had been established that Kaup had fled, a federal judge issued a warrant for his arrest. The FBI subsequently publicized the fugitive’s photo and description, after efforts to immediately locate him were unsuccessful.
Local media outlets also reported on the case and Kaup was among those featured on a CNBC series, “American Greed: The Fugitives.”
Shortly after the CNBC story aired, FBI agents received information that led them to a home in Las Vegas where Kaup had been staying, and he was arrested without incident a year ago.
Kaup — who used the aliases David Smith and David Martinez — had been known to work as a disc jockey in the Los Angeles and Las Vegas areas and sometimes called himself “New Age Dave.”
— City News Service