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May 16, 2018

Missouri Man Pleads Guilty in $3.4 Million Real Estate Investment Scheme that Targeted Orange County Investors

Filed under: California Defense Attorney — fayarfa @ 4:15 am

SANTA ANA, California – A Missouri man who formerly served as a law enforcement reservist has pleaded guilty to a federal fraud offense and admitted operating a real estate scheme in Orange County that bilked dozens of Southern California investors who collectively suffered approximately $3.4 million in losses.

Shawn Patrick Watkins, 48 – who resided in Layton, Utah during the course of the fraud, but has since relocated to Branson, Missouri – pleaded guilty on Monday to one count of mail fraud.

Watkins pleaded guilty before United States District Judge Cormac J. Carney, who scheduled a sentencing hearing for November 19.

A second person involved in the scheme – Angel Bronsgeest, 55, of Lake Forest – previously pleaded guilty to one count of wire fraud and is also scheduled to be sentenced by Judge Carney on November 19.

According to court documents, Watkins promoted himself as a real estate expert with a background in law enforcement and engineered a 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 (TEGG) 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.

Watkins made a number of false promises to investors. For example, investors were falsely advised that TEGG controlled hundreds of properties that generated rental income and that TEGG 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.

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. In fact, 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.

As a result of his guilty plea, Watkins faces a statutory maximum penalty of 20 years in federal prison.

The cases against Watkins and Bronsgeest are the result of an investigation by the Federal Bureau of Investigation.

The prosecution of these cases is being handled by Assistant United States Attorney Greg Staples of the Santa Ana Branch Office.

Component(s): USAO - California, Central

Contact: Thom Mrozek Spokesperson/Public Affairs Officer United States Attorney’s Office Central District of California (Los Angeles) 213-894-6947

Press Release Number: 18-078 Updated May 15, 2018

Central District of California DOJ / 18-078 / May 15, 2018

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