Texas Man Cops Guilty Plea To Real Estate Ponzi Scheme Using Bogus Liens, Deeds Of Trust To Purportedly Secure Investors' Cash

From the Office of the U.S. Attorney (Dallas, Texas):

• David Boles, 52, of Colleyville, Texas, who owned Metro Buy Homes, LLC., pleaded guilty [...] to one count of mail fraud, announced U.S. Attorney James T. Jacks of the Northern District of Texas.

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• According to documents filed in the case, from January 2008 through August 2010, Boles ran a scheme to defraud a number of investors by making materially false representations to them. For instance, he advised that invested money would be used to buy real estate and that investments would be secured by real estate.

• To further the scheme, Boles sent Deeds of Trust and Real Estate Liens that purportedly gave investors liens against specific properties in exchange for their investment. However, Boles did not own a number of the properties that were supposedly used to secure the investments, and some of the Deeds of Trust and Real Estate Lien Notes that he sent investors were fraudulent.

• Boles also sent checks to investors, and advised them that the checks represented profits from their investments. However, in many cases the checks were simply drawn from the principal investments made by the investor. On other occasions, Boles funded checks written to one investor with money received from other investors.(1) Boles believed that telling the investors that the checks represented earnings on their investments would encourage them to invest more money.

For the U.S. Attorney press release, see Colleyville, Texas Businessman, Who Owned Metro Buys Homes, Pleads Guilty To Federal Mail Fraud Charge (Defendant Faces Up to 20 Years in Federal Prison).

(1) A classic "Ponzi Scheme."