May 21 2012 – LawFuel – American Law Newswire –
SANTA ANA, California – An Orange County attorney was sentenced today to 87 months in federal prison for participating in a fraud scheme that took in more than $25 million with bogus promises of huge returns on short-term loans to businesses.
Jeanne Rowzee, 53, of Irvine, was sentenced by United States District Judge Andrew J. Guilford. In addition the prison term, which Rowzee was ordered to begin serving on June 15, Judge Guilford ordered her to pay $25,544,811 in restitution.
“Investment scams harm investors large and small, and Ms. Rowzee and her cohorts bilked scores of investors with empty promises,” said United States Attorney André Birotte Jr. “Rowzee played a key role in this scheme by promising huge returns on investments and pretending to be an experienced securities attorney.”
Rowzee pleaded guilty in October 2008 to conspiracy and securities fraud, admitting that she helped bilk victims who thought they were investing in public investments in private entities (PIPEs) and money market programs. Rowzee and her co-schemer – James Halstead, 65, of Tustin – promised returns of 25 percent to 35 percent every three to four months. When the scheme collapsed, approximately 140 investors suffered more than $20 million in losses.
Halstead was sentenced two years ago to 10 years in federal prison.
Rowzee and Halstead solicited investments in PIPEs as short-term bridge loans to companies that were in the process of obtaining equity financing for growth. Victims were told that their money would be used to fund the short-term loans, and Halstead and Rowzee claimed they had never lost money in this type of investment. Halstead and Rowzee told victims that Rowzee was an experienced securities attorney and had previously worked for the Securities and Exchange Commission.
In reality, the victims’ money was never invested. Halstead and Rowzee instead used the money to make Ponzi payments to some investors and to support their lavish lifestyles. According to court documents, Halstead used $191,005 of victim-investors’ money to buy a Ferrari, more than $1 million to purchase a home for himself in the Las Vegas area, and $162,350 to buy a Porsche.
When she pleaded guilty, Rowzee admitted that the PIPEs scheme was a fraud, and that claims to investors – regarding the existence of the PIPEs, her experience as a securities lawyer, that she personally performed due diligence on each PIPE, and that they had never lost any money – were false.
The investigation into the PIPE scheme run by Halstead and Rowzee began when victims of the scheme reported the fraud to the FBI’s Orange County office. The investigation into Halstead and Rowzee was conducted by the Federal Bureau of Investigation, which received assistance from the Securities and Exchange Commission.
Release No. 12-067