Feds: Suburban Man Took More Than $4M In Ponzi Scheme
CHICAGO (STMW) -- A Mount Prospect man who raised about $12 million from investors in a real estate deal that federal prosecutors call a "Ponzi" scheme has been charged with wire fraud and sued by the SEC.
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Robert R. Anderson of Mount Prospect was arrested Thursday morning at his home on federal fraud charges for allegedly raising about $12 million from 70 investors and swindling more than $4 million of it for personal use, according to a release from the U.S. Attorney's office.
He appeared Thursday afternoon before U.S. Magistrate Judge Sheila Finnegan, who allowed him to be released into his wife's custody, but placed him on home detention and ordered him to wear an electronic monitor, according to U.S. Attorney's office spokesman Randall Samborn.
A detention hearing to set a secured bond will be conducted at a later date, he said, and a preliminary hearing is set for 10:30 a.m. on Oct. 18.
Investors were promised extraordinary returns from Anderson's purported real estate business, but he allegedly used the funds for his own unrelated investments, for payments to others, and for his and his family's personal use, the release said.
Also Thursday, the Securities and Exchange Commission, which assisted in the investigation, filed a civil complaint against Anderson and his company, seeking a permanent injunction, repayment of fraud proceeds and financial penalties, the release said.
Anderson is president of Affordable American Homes Inc. and secretary of Rosand Enterprises Inc. The company's website claimed REI managed the operations of AAH and several other businesses that manufactured residential construction components, exported housing to other countries, and provided training in building trades. Most of its revenue came from the sale of promissory notes to investors, the release said.
Between 2006 and September 2010, Anderson allegedly schemed to defraud and obtain money from investors through the sale of promissory notes issued by REI, which unconditionally guaranteed the payment of monthly interest between 10 and 20 percent for six months to a year, the release said.
Anderson claimed the funds would be used as collateral for a line of credit that he would use to build low-income housing and that interest payments to investors were generated from the closings of the houses, the charges allege.
Anderson allegedly bolstered his scheme by depositing investor funds in escrow accounts to reassure investors about the safety of their funds. Based on analysis of bank records, documents, interviews with victims and information from the SEC, between January 2006 and May 2009, Anderson allegedly obtained about $12 million from approximately 70 investors.
He used about $7,87 million to make Ponzi-type interest payments to investors, while misappropriating the balance, about $4,18 million, including more than $1.9 million for unrelated investments, more than $445,000 for payments to others, and more than $818,000 for personal use, the charges allege.
There was no indication that Anderson received any income from the sale of homes or made any payments to construction subcontractors. While claiming to own about 200 parcels of real estate in Illinois, Indiana and Wisconsin, records show his firm owned only a single property on Michigan Avenue in Chicago with a 2008 estimated market value of $195,788.
(Source: Sun-Times Media Wire © Chicago Sun-Times 2010. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
