California Investment Fraud Masterminds Guidi and Armitage Arrested
Investors in Sonoma County are relieved at the arrest of Gary Armitage and Jeff Guidi for securities fraud.
The two were recently arrested and have been charged with multiple counts of securities fraud and residential burglary. The residential burglary charges relate to the fact that the two entered people's homes while selling their schemes. Armitage and Guidi ran AGA Financial, an investment company in Santa Rosa. Their Ponzi scheme swindled an estimated $200 million from thousands of people before it fell apart. The duo's business partner, James Koenig, was also arrested on similar charges. If they are convicted, the three could each spend 100 years in prison.
According to Attorney General Jerry Brown, the three used investor money to bankroll their lavish lifestyle, including luxury residences, expensive cars, and a Lear jet. Most of the investors were retirees who Armitage and Guidi coaxed into investing their life savings.
According to the AG's office, the three men established a network of 55 businesses to keep their Ponzi scheme going. In 1997, the three began selling real estate projects, promising investors they were secure low risk investments with returns of 12 percent or more. Investment planning seminars were held across the state,and investors handed over sums ranging from between $50,000 and $1 million. Some people actually invested their entire savings accounts funds and retirement portfolios.
In 2001, the three redirected investor funds into purchasing more than 20 senior care facilities. Each of them were sold to one of the affiliate companies, which would then sell shares in the property at a high price to new investors. Another affiliate company in the network would manage the property to increase revenues. Any revenues were used to pay interest to investors and keep the scheme afloat. The scheme began to unravel when the defendants could not keep up with interest payments to investors. That did not stop Armitage and Koenig from seeking investors, however. They continued to attract new investors using new investment funds to pay off earlier investors who were beginning to get worried.
With frauds tumbling out of the closet at an alarming rate, it looks like securities attorneys will be busy for a while to come.
