We've got our own Bernie Madoff Jr.!
Leucadia's Scott Bottolfson pleaded guilty to felony wire fraud and faces up to 20 years in prison:
According to a criminal complaint filed Nov. 30, 2010 with the U.S. District Court, Southern District of California in San Diego, Scott Bottolfson through at least two entities he owned and operated – Increase Investments, Inc. and Spirit Investments -- solicited more than $15 million from investors, many from neighbors in the Town of Newbold [Wisconsin] where he had lived for awhile, in exchange for fixed high-rate promissory notes, in at least one case of 20%.
The alleged fraud occurred from approximately September 2001 initially in the Newbold area and from 2005 through July 2010 from Bottolfson's base in Encinitas, California, prosecutors said.
The complaint said that as part of the scheme Bottolfson solicited investors via interstate e-mail and telephone calls and falsely claimed to investors that he could guarantee "high rates of return" for their investments that included commodities futures trading. The complaint said Increase was not registered with the National Futures Association (NFA).
The complaint read here said Bottolfson did not invest all investor funds as represented, but used “as much as 50% of investor funds for personal expenditures.” The “Ponzi” scheme involved giving new investor funds to previous investors and falsely representing those funds as investment returns, the complaint stated. “Defendant returned several million dollars to investors through the Ponzi scheme activity but still caused losses of approximately $6 million,” it added.
One victim, mentioned in the complaint by the initials only as “R.W.”, gave Bottolfson $1.3 million in December 2008 to invest in return for a promised guaranteed rate of return of 20%, but the money was used instead to pay previous investors, according to the complaint.
Details of the case are in this National Futures Association document and this criminal case.
Bottolfson bought the house at 1262 Urania in 2005 for $1.55 million.
HT: Encinitas Patch. Damn they're good.