12-16-2013, 09:42 PM
(This post was last modified: 12-16-2013, 10:14 PM by PonderThis. Edited 4 times in total.)
This was a Bend company that handled real estate 1031 exchanges that swindled 91 different real estate investors out of all of their property value's money. In case you don't know about 1031 exchanges, it's an IRS approved method of exchanging one piece of real estate for another, and since properties are technically being exchanged rather than sold, it defers taxes on the transaction. But in the meantime (between when money is received from the first sale, but before it's spent on the new "purchase"), people have to hire a "facilitator" who holds their money until the transaction is complete, and the IRS is then satisfied. Except this company didn't just hold the money like they were supposed to, they used it to invest in their own projects instead, and when those went bad all the innocent investors who had essentially hired them to hold their money got swindled out of it instead.
How much human misery is involved in a $13+ million fraud case, spread among 91 people? I see people on the forum talking about black crime often, which tends to be petty little stuff, in comparison to this was good old local Bend boys who went for the gusto here.
I'm not sure what a truly fair punishment might be in a case like this, but it almost seems like nothing could really be enough, either: http://www.oregonlive.com/business/index...cart_river
Excerpt: "Three former executives of Summit Accommodators, the Bend company that collapsed in 2008 amidst charges of fraud, were sentenced Monday to prison terms half or less the recommendation of federal prosecutors.
U.S. District Court Judge Anna Brown sentenced Mark Neuman, Summit co-founder, to 6.5 years. Timothy Larkin and Lane Lyons, Summit senior executives, were each sentenced to 4.5 years.
A jury found all three guilty of conspiring to commit fraud and money laundering. Prosecutors allege that 91 Summit customers lost $13.7 million after the Summit principals secretly used their money to fund more than a hundred real estate deals.
The scheme worked for years but spun out of control after the recession hit in 2007 and Central Oregon land values plunged. Summit closed its doors with no notice in December 2008, leaving frantic customers searching for their money.
Friends and family packed the Portland courtroom Monday, some of whom testified. Daniel Larkin, Timothy Larkin's 30-year-old son, took the stand to attest to his father's solid character, his charitable ways and their modest lifestyle. With four children and a three-bedroom house, Daniel Larkin said, he always shared a room with his brother. Vacation generally meant camping in the Cascades or the Ochoco mountains.,
Neuman and Brian Stevens, both certified public accountants, founded Summit in 1991. Larkin was Summit's director of operations. Lyons, an attorney, joined the company in 2005 after several years working as its outside counsel. Stevens pleaded guilty on April 7 to charges of conspiring to commit wire fraud and conspiring to launder money and was initially sentenced to 48 months. U.S. District Court Judge Michael Mosman in October took the unusual step of cutting Stevens' sentence to time-served, he'd been in prison 13 months at that point.
The other three Summit defendants were clearly hoping for similar treatment. Judge Brown was of no mind to be that charitable. "I'm not going to seriously think about 13 months," she said.
Neither did Brown accept the prosecutors' recommendation that Neuman serve 15 years and Larkin and Lyons serve 9 years.
Judges in these cases are always presented "the paradox of good character and good deeds vs. the criminal behavior," Brown said.
Summit was a so-called "facilitator" of 1031 tax-deferred exchanges, a popular tax avoidance strategy. The IRS allows property owners to defer capital gains taxes on profits from those transactions if they buy another qualifying property within certain time limits. As a facilitator, Summit's role was simple: it was to hold customers' money while they concluded these 1031 transactions.
The company prospered as the Central Oregon economy flourished customers flocked to participate in 1031 transactions. Summit's average monthly assets doubled from 2004 to 2006 reaching $109 million. On its website and in its customer contracts, Summit allegedly said it held its customers' money in a financial institution. Actually, prosecutors claim, they were diverting some of the money into a company called Inland Capital and, from there, to a whole series of individual real estate projects. The Summit executives owned Inland and many of the real estate ventures."
How much human misery is involved in a $13+ million fraud case, spread among 91 people? I see people on the forum talking about black crime often, which tends to be petty little stuff, in comparison to this was good old local Bend boys who went for the gusto here.
I'm not sure what a truly fair punishment might be in a case like this, but it almost seems like nothing could really be enough, either: http://www.oregonlive.com/business/index...cart_river
Excerpt: "Three former executives of Summit Accommodators, the Bend company that collapsed in 2008 amidst charges of fraud, were sentenced Monday to prison terms half or less the recommendation of federal prosecutors.
U.S. District Court Judge Anna Brown sentenced Mark Neuman, Summit co-founder, to 6.5 years. Timothy Larkin and Lane Lyons, Summit senior executives, were each sentenced to 4.5 years.
A jury found all three guilty of conspiring to commit fraud and money laundering. Prosecutors allege that 91 Summit customers lost $13.7 million after the Summit principals secretly used their money to fund more than a hundred real estate deals.
The scheme worked for years but spun out of control after the recession hit in 2007 and Central Oregon land values plunged. Summit closed its doors with no notice in December 2008, leaving frantic customers searching for their money.
Friends and family packed the Portland courtroom Monday, some of whom testified. Daniel Larkin, Timothy Larkin's 30-year-old son, took the stand to attest to his father's solid character, his charitable ways and their modest lifestyle. With four children and a three-bedroom house, Daniel Larkin said, he always shared a room with his brother. Vacation generally meant camping in the Cascades or the Ochoco mountains.,
Neuman and Brian Stevens, both certified public accountants, founded Summit in 1991. Larkin was Summit's director of operations. Lyons, an attorney, joined the company in 2005 after several years working as its outside counsel. Stevens pleaded guilty on April 7 to charges of conspiring to commit wire fraud and conspiring to launder money and was initially sentenced to 48 months. U.S. District Court Judge Michael Mosman in October took the unusual step of cutting Stevens' sentence to time-served, he'd been in prison 13 months at that point.
The other three Summit defendants were clearly hoping for similar treatment. Judge Brown was of no mind to be that charitable. "I'm not going to seriously think about 13 months," she said.
Neither did Brown accept the prosecutors' recommendation that Neuman serve 15 years and Larkin and Lyons serve 9 years.
Judges in these cases are always presented "the paradox of good character and good deeds vs. the criminal behavior," Brown said.
Summit was a so-called "facilitator" of 1031 tax-deferred exchanges, a popular tax avoidance strategy. The IRS allows property owners to defer capital gains taxes on profits from those transactions if they buy another qualifying property within certain time limits. As a facilitator, Summit's role was simple: it was to hold customers' money while they concluded these 1031 transactions.
The company prospered as the Central Oregon economy flourished customers flocked to participate in 1031 transactions. Summit's average monthly assets doubled from 2004 to 2006 reaching $109 million. On its website and in its customer contracts, Summit allegedly said it held its customers' money in a financial institution. Actually, prosecutors claim, they were diverting some of the money into a company called Inland Capital and, from there, to a whole series of individual real estate projects. The Summit executives owned Inland and many of the real estate ventures."
