SANTA ANA, Calif. – LAWFUEL – The Legal Newswire – A Newport Beach man has agreed to plead guilty to federal fraud and money laundering charges and to admit that he ran a bogus investment program that promised rates of return of at least 10 percent per quarter.
John Carl Willy, 64, was charged in a criminal information filed here yesterday in United States District Court. The three-count information charges Willy with two counts of wire fraud and one count of money laundering. In a plea agreement filed this afternoon, Willy agreed to plead guilty to the three charges, which carry a statutory maximum penalty of 50 years in federal prison.
In the plea agreement, Willy acknowledges that he induced investors to give him money by falsely promising to use the investors’ funds to generate returns through investment in a European investment program. Using the business names Coastal View Investments (CVI) and Luxin Limited, Willy told investors that these entities participated in a program through the Federal Reserve Bank that allowed CVI and Luxin to deposit funds with a bank in London, and that European banks could use the funds as collateral. Willy falsely promised investors that the funds would never leave the London bank account and that the program was protected by an insurance policy underwritten by AIG. Victims were told that their money would earn 10 percent every quarter.
However, as he admitted in the plea agreement, Willy used the investors’ funds to enrich himself, to operate CVI and Luxin, and to further promote the scheme. He used investor money to buy a home in Newport Coast, as well as to acquire automobiles, including a Cadillac Escalade and Porsche Cayenne SUV. In a classic Ponzi scheme, Willy also used money from new investors to make quarterly payments to earlier investors, thereby concealing the fraudulent scheme by making earlier investors believe they were earning the promised rate of return. The government and Willy have agreed that victims have lost at least $4,192,929 as a result of the scheme.
Willy has agreed to make an initial appearance in United States District Court here on December 3. He will be arraigned on the charges at the same time.
In addition to full restitution, the plea agreement contemplates a prison sentence in the area of five years, although this calculation is not binding on the sentencing judge, who will be free to sentence Willy to any sentence up to the statutory maximum penalty.
The case against Willy is the result of an ongoing investigation by the Federal Bureau of Investigation and IRS-Criminal Investigation.
CONTACT: Assistant United States Attorney Douglas F. McCormick