Equity Build Ponzi Scheme: 'I Went From A Millionaire To A Pauper Overnight,' One Victim Says
CHICAGO (CBS) -- They thought it was a good bet, but instead their life savings were wiped out and families ruined.
It's a nationwide Ponzi scheme using investment properties on the South Side of Chicago. As CBS 2 Investigator Pam Zekman has learned, the whole thing could have been avoided.
Mary and Richard Lohrman, high school sweethearts and married for 45 years, enjoy spending leisurely mornings together, drinking coffee and swinging on their front porch. As they approached their retirement years, they prepared for a future filled with what they hoped would be many more days like like this.
"Oh, we had it all planned, we used spreadsheets, we had everything set out," said Mary Lohrman.
But, Richard and Mary -- both 66-years old -- were about to see the future they worked so hard for slip away.
"Well, having recently had a triple bypass and medical problems," Richard Lohrman said. "I was looking for ways to create passive income when I retire."
He came across an infomercial hosted by one of his favorite actors.
"It was William Shatner, Captain Kirk," recalled Lohrman.
"Welcome to our series, Moving America Forward," William Shatner says as the video begins.
The infomercial featured Jerry and Shaun Cohen -- a father and son -- who run a real estate investment company called Equity Build.
"Our mission, our objective is to help as many people become independently wealthy as possible," said Shaun Cohen in the video.
"What a bunch of bull," said Mary Lohrman as she re-watched the video.
In the video, the Cohen's promised investors up to a 23% return.
The Lohrmans invested $185,000.
"People's lives have been shattered, totally shattered and this a story that needs to be told," said David Marcus, another Equity Build investor.
David Marcus bought into the Cohen's sales pitch -- to the tune of $1.4 million.
"They could sell you a winter's vacation in the North Pole and have you thank them for it," Marcus said.
Equity Build's business model was to buy homes and dozens of multi-unit buildings on the South Side of Chicago. They were going to rehab them, flip them or rent them out which would provide regular income to the investors.
The Cohens bragged about how well things were going in Chicago.
"Chicago has proven to be an excellent market," said Jerome Cohen.
Shaun Cohen added, "It's one of the best in the country right now."
But, in 2018 the U.S. Securities and Exchange Commission shut Equity Build down and froze its assets. The SEC charged Equity Build and Jerry and Shaun Cohen with running a Ponzi scheme.
A Ponzi scheme is when a business in question pays off old investors from the money new investors are pouring into the enterprise -- until the whole thing collapses.
The SEC complaint says the Cohens over-inflated the value of the properties and "skimmed up to 30% off of each investment by taking undisclosed fees."
"I went from a millionaire to a pauper overnight," said David Marcus.
In all, the SEC says the Cohens took in $135 million from 900 investors.
Mary Lohrman says the experience has had a dramatic effect on their lives.
"Oh it's been hard on us, it's been hard on our kids. It's hard, it's put some strain on our marriage," said Mary Lohrman.
Lindsay Hirsch says her father, Gordon, discovered that Equity Build was a Ponzi scheme. He was their lawyer.
And then ...
"On November 21, 2012, my dad took his own life," she said.
Gordon Hirsch left a detailed suicide note explaining the Ponzi scheme and urging whoever found the note to take the material to the F.B.I.
Lindsay provided CBS 2 Investigators a copy of her dad's note. It reads in part:
"I had no idea they were corrupt until right before I withdrew which is why I withdrew, I'm sorry for the investors."
And later in the note Gordon wrote:
"They will flee."
"My dad was my best friend, he was my everything and I would go to the end of the Earth to make sure whatever he wanted to be done would be done," said Lindsay Hirsch.
So, Lindsay took her father's suicide note and documents to theFBI headquarters in Chicago. She says the FBI told her not to tell anyone else about the scheme while they investigated it.
"I went to the FBI in November of 2012, in 2015 they closed the case," Lindsay Hirsch said. "They told me that they couldn't pursue it, because the money was taken through people's 401k's and cash so it was deemed untraceable."
People continued to invest money after Lindsay had presented her information to the F.B.I.
"If the FBI and the SEC would have acted sooner, these people would still have their life savings," Hirsch said.
"If they had listened to Lindsay Hirsch at the time this all could have been prevented," Marcus said.
A closer look at the timeline proves that point.
Lindsay Hirsch took her father's documents to the FBI in November of 2012. The Lohrman's invested their $185,000 in 2013. In 2015 the FBI closes their case. In November, 2015 David Marcus invests his $1.4 million. The SEC begins their investigation in 2016 and then finally in 2018 the SEC files a complaint and freezes Equity Build's assets -- six years after Lindsay first alerted authorities.
The FBI refused to answer our questions regarding why they never took any action back in 2012.
"I'm sorry and i feel horrible, I wish there was more I could do," Hirsch said. "And I did the best that I could."
"I'm so, so mad about this, I don't know what to do," said Marcus.
While the Cohens operated out of state, a man named Ronald Bol was Equity Build's Chief Operating Officer -- their man on the ground in Chicago.
Richard Lohrman remembers meeting Ronald Bol in Chicago
"[I] actually got to visit the properties in Chicago with the main property construction guy," Richard Lohrman said.
The CBS 2 Investigators tracked Bol down at his south suburban home, where he now works as a licensed home inspector.
Pam Zekman: "Investors believe that you were part of this whole thing and I want to give you an opportunity to respond to that."
Ronald Bol: "I'll respond if something shows up in court with my name on it. "
Bol claims he's under a court order and cant talk about the case.
Zekman asked him again if he was part of the Ponzi scheme in which investors lost more than $100 million, but he refused to answer and walked away.
A judge hearing the SEC case recently ruled that Jerome Cohen owes $3,041,470 in fines and penalties and Shaun Cohen owes $3,533,538 in fines and penalties.
Equity Build's assets are being sold off to reimburse the investors.
"Everyone I've talked to says don't expect much, OK? I'll be lucky to get pennies on the dollar," said Richard Lohrman.
"They should both be in jail and maybe the same jail as Bernie Madoff," added David Marcus.
As for Richard and Mary's future now?
"We both have decided we need to go back to work," Richard said
Mary is working as a cashier, "because well, I can get the work and I get some money."
They've also had to sell their retirement home in Arizona.
"The money's gone. It's gone," said Mary
The Lohrman's message to federal authorities is clear.
"Do your job," said Richard Lohrman. "It's wrong, it's wrong, the government let us down."
So far, there no criminal charges for anyone involved in this case. And there is little hope that the Cohens will ever pay their fines. And Gordon Hirsh's prediction from his suicide note has come true. Federal sources say Jerome Cohen has fled to Israel.
The U.S. Securities and Exchange Commission have resources to help people recognize and avoid Ponzi schemes:
https://www.sec.gov/oiea/investor-alerts-and-bulletins/ia_ponziseniors