A Missouri man who formerly served as a law enforcement reservist faces up to 20 years behind bars when he is sentenced in November for running a real estate scheme in Orange County that bilked dozens of investors out of a total of more than $3.4 million.
Shawn Patrick Watkins, 48, pleaded guilty in Santa Ana federal court Monday to one count of mail fraud, according to the U.S. Attorney’s Office.
A second person involved in the scheme — Angel Bronsgeest, 55, of Lake Forest — previously pleaded guilty to wire fraud and also is scheduled to be sentenced on Nov. 19.
According to court documents, Watkins promoted himself as a real estate expert with a background in law enforcement and engineered the scheme that defrauded more than 50 victims. Watkins admitted in his plea agreement that he conducted monthly seminars in which he offered investments in his company, The Equity Growth Group, from at least 2007 to at least October 2013.
Victims were told their money would be used to acquire or to repair properties. Some investors were asked to provide “bridge loans” to allow TEGG to acquire certain properties when money from another investor had not been received, prosecutors said.
Watkins also made a number of other false promises to investors. For example, investors were falsely advised that TEGG controlled hundreds of properties that generated rental income and that the company would continue its growth by acquiring new properties.
Investors were led to believe that they would receive substantial interest payments and that their money would be secured by collateral through the filing of deeds of trust on properties, according to federal prosecutors.
In reality, over the course of several years leading up to the collapse of TEGG, the company was not acquiring new properties and had a negative cash flow. Investor money was not used to acquire new properties, nor were investments secured by collateral, and many victims did not receive interest payments, prosecutors said.
The U.S. Attorney’s Office said money that was paid to some victims as purported interest or a return on their investment came from investments made by other victims. Investor funds also were used to pay salaries and other expenses, including mortgages on three homes Watkins purchased and were being occupied by Watkins, his parents and his estranged wife and children, according to prosecutors.