The owner of an Orange County real estate investment firm was sentenced to 168 months in prison for perpetrating a scheme that ended with the firm’s bankruptcy and hundreds of investors losing a total of $169 million.
Michael J. Stewart, 68, of San Clemente, was also ordered Monday by U.S. District Judge Cormac J. Carney to pay $9,234,914 restitution to 120 victims in connection with his conviction on 11 counts of mail fraud in August.
Stewart owned and was the chief executive of Pacific Property Assets which had offices in Long Beach and Irvine.
Although the rental operations were not profitable, the company raised cash through refinancing and selling properties, according to U.S. Attorney Eileen M. Decker.
As real restate values increased until 2007, the properties were financed at higher values but when the real estate market collapsed, Stewart and co-partner John Packard started using fraud to keep the failing company operating, Decker said.
“While all investments carry some risks, victims who were lured into this scheme in 2008 and 2009 faced a guaranteed loss of their funds,” Decker said.
Some $34 million was raised from new investors, many of them retired. One investor, a 74-year-old woman, invested most of her money with the firm after her husband died, Decker said.
Stewart and co-defendant John Packard used new funds to pay earlier investors in what Decker described as a Ponzi scheme that ultimately collapsed.
Packard pleaded guilty to one count of mail fraud in November 2014 and cooperated with prosecutors. He is scheduled to be sentenced on March 28.
—City News Service