A Delaware businessman was sentenced to more than four years in federal prison for a multi-million-dollar Ponzi scheme.
Carl Chen, owner of the Chenmax Properties, Inc, a Delaware Real Estate Investment Trust and part owner of Re/Max Sunvest Realty Co., was sentenced to 51 months in prison on Monday, August 19, 2019.
Chen pleaded guilty in March to wire fraud emanating out of a multi-year Ponzi scheme he orchestrated.
According to court documents and statements during the hearing, Chen operated Chenmax Properties since 1997. He solicited large real estate investments from his clients and others, and he promised his investors guaranteed interest and a full return of their principal payments.
His business started losing money in 2013, and that's when he started diverting newly invested funds to pay prior investors.
The government calculated that Chen fraudulently collected at least $3.32 million in investments from twenty different victims between 2013 and 2017.
He declared bankruptcy in October, 2017 seeking to discharge $6.738 million dollars of debt he owed to investors including the victims of his fraud.
"One of the most horrendous white collar offenses that I remember seeing," said United States District Judge Richard G. Andrews, who sentenced Chen.
At the sentencing hearing, victims described how Chen solicited hundreds of thousand of dollars in investments from them on multiple occasions, claiming that the investments were for real estate ventures. What happened Chen immediately used the money from investors to pay off other investors or for Chen's personal expenses.
"Chen brazenly defrauded innocent Delaware residents, and others, who believed his promises and trusted him to handle their financial security. While this sentence cannot repair the breach of trust, it sends a strong message that my office will prosecute these fraud crimes and seek substantial prison terms for anyone who, like Chen, carries out a large-scale fraud against unsuspecting victims," said David C. Weiss, U.S. Attorney for the District of Delaware.