A federal judge ruled that the Bellevue, Washington-based real estate investment firm iCap defrauded hundreds of real estate investors through a Ponzi scheme.
The Seattle Times reported Chief Judge Whitman Holt made the finding about iCap in bankruptcy court proceedings as part of an effort to wind down iCap while seeking to repay investors who channeled $230 million into the company.
According to Jeffrey Kinrich, a consultant and accountant who reviewed iCap’s internal records, the company invested $103.4 million in real estate projects between 2013 and 2022 and sold projects worth $104.8 million, resulting in only $1.4 million in profits – far below the levels needed to repay investors.
The investors’ attorneys say iCap promised to direct investor funds into real estate development projects, including in the Seattle area, while paying investors monthly interest payments; the attorneys claimed iCap targeted Chinese investors. When the company stopped making interest payments last spring, the investors sued iCap, which filed for bankruptcy.
Holt said “there is substantial, if not overwhelming, evidence” that the company operated as a Ponzi scheme. No criminal charges have been filed against iCap and its officers, although attorneys for former CEO Chris Christensen said in a court filing earlier this year that the FBI and the U.S. Securities and Exchange Commission had “opened a criminal investigation into iCap.”
Holt’s ruling opens the way for potential against the company and other entities, including the banks that loaned money to iCap, and could help investors seeking a tax deduction for the money they invested. Holt added that he hoped that between tax benefits and any returns from future lawsuits, investors would “receive at least part of their investment back.”
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How do you take in $230 million and only invest $103.4 million??? That right there makes this a scam. Someone is hiding a lot of money somewhere!