Damian Williams, the United States Attorney for the Southern District of New York, announced that DEREK JONES, a disbarred California attorney, was sentenced today to five and a half years in prison.
JONES ran fraudulent investment funds, including real estate investment firms and a venture capital firm, through which he defrauded investors of over $8.6 million over a period of over seven years, from at least 2012 to 2019. JONES previously pleaded guilty to one count of wire fraud and was sentenced today before United States District Judge Loretta A. Preska.
US attorney Damian Williams said: “When investors buy shares in real estate funds and other investment funds, those investors have every right to expect that the people who promote and sell those investments treat them honestly and tell them the truth about their investments.Today, Derek Jones, a disbarred lawyer, was held responsible for violating this right for a long period of time, selling interests in property properties he claimed to wrongfully own and defrauded his investors out of millions of dollars.”
According to the indictment, statements made in court and other publicly filed documents in this case:
From at least 2012 to at least 2019, JONES tricked his victims into investing in various companies and investment funds he controlled, including purported real estate development and investment companies using variations of the names” BlueRidge”, “Living City” and “Atiswin” and purported venture capital firm Realize Holdings (“Realize”).
By fraudulently enticing victims to invest in his funds, JONES routinely lied to investors, including in glossy brochures and legal documents containing false statements about real estate that JONES claimed was owned or otherwise controlled by BlueRidge , Living City and Atiswin. For example, JONES falsely told investors and potential investors that BlueRidge was developing a “resort village” on land it controlled on Semiahmoo Spit in Washington State and, separately, that BlueRidge had purchased an existing hotel in same location, when in fact neither BlueRidge nor JONES owned or controlled any of these assets. In other instances, JONES falsely claimed that his companies were under contract to purchase a ranch in Colorado and that his companies had secured long-term leases for various properties for development, including California properties in Santa Monica , Hermosa Beach and Los Angeles. Instead of using investors’ money as he promised, JONES embezzled investors’ money, using much of it to make Ponzi-like payments to other investors he owed money to. money from previous transactions and for personal and family expenses, including the private-school fees of his children.
In carrying out his scheme, JONES also sent forged and counterfeit documents to investors and others. For example, on several occasions, JONES provided falsified bank statements showing that he had millions of dollars in various corporate accounts, when in fact he had little or no money in those accounts. On other occasions, he provided forged financial statements allegedly based on internal audits of companies he controlled. He also sent investors and others falsified contracts with deleted key pages, falsified land leases and fictitious asset allocation statements. JONES also used other people’s names – without those people’s permission or knowledge – to communicate via email with investors and thus foster the illusion that JONES’ businesses were viable operations with real employees. .
In total, JONES defrauded investors out of over $8.6 million.
During the commission of the fraud charged in this case, JONES was suspended from practicing law by the State Bar Court of California for prior fraudulent conduct. JONES was ultimately disbarred in July 2022 based on state bar court findings that he intentionally misappropriated money belonging to a client in 2011 and made false statements to the client , in court and to others.
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JONES, 48, of San Marino, Calif., pleaded guilty Nov. 1, 2021, to a single count of wire fraud. He was sentenced today to five and a half years in prison, three years of probation, the forfeiture of $8,679,787.66 and restitution to his victims in an amount to be determined within the next 90 days.
Mr. Williams commended the excellent work of the Federal Bureau of Investigation.
This case is being handled by the Bureau’s Complex Fraud and Cybercrime Unit. Assistant U.S. Attorneys David Raymond Lewis and David M. Abramowicz are charged with the prosecution.
Contact:
Nicolas Biase (212) 637-2600
Press release number:
23-012
Updated on January 17, 2023
