Crime - Sacto 911

Victims recount heartbreaking losses at sentencing for Ponzi scheme conspirators

Three Ponzi schemers who robbed and pillaged the savings and lives of dozens of Sacramento-area families were sent away Friday for long stretches in prison.

It was as close to justice as the victims will ever get.

“This case is one of the most egregious in terms of taking advantage of people who will never, ever get back (financially) to where they were. They don’t have enough years left,” U.S. District Judge Troy L. Nunley said.

In sentencing Christopher Jackson to 30 years behind bars, Nunley told him, “You’ll go to prison, but that won’t do (the victims) any good.”

Co-defendants Michael Bolden and Victor Alvarado were sentenced to 20 years and 10 years, respectively.

Jackson, 46, of Elk Grove, was already in custody. The judge ordered deputy U.S. marshals to take Bolden, 60, and Alvarado, 53, both residents of Sacramento, into custody immediately after he imposed their sentences.

During a nearly nine-hour hearing Friday, Nunley made formal findings that the net loss to investors, ranging in number between 50 and 250, is in excess of $20 million.

Over seven years in the mid-2000s, the trio and another three co-conspirators drained a gross of about $30 million from tax-deferred retirement accounts, residential loan refinances, and just plain hard-won nest eggs. Early investors were reimbursed roughly $10 million, which was represented by the white-collar bandits as earnings on investments, but it was really money from later investors – a typical Ponzi scam.

Diversified Management Consultants, a Bolden creation that served as the fraud’s facade, purported to help people invest in the purchase and development of land. Subordinates ran “investment clubs” under the DMC umbrella, and Bolden made most decisions as to how the money was disbursed, according to court documents and testimony.

Co-defendant Nicholo Arceo headed one of the clubs. He testified at the hearing that he knows of no development projects funded in whole or in part by money from the DMC apparatus.

According to prosecutors, a majority of those targeted were middle-class African Americans with strong religious beliefs. Bolden and Jackson, both African American, often worked religious references into their pitches, and also counted on the commonality of race to cause their marks to more closely identify with them, the prosecutors said.

Even as DMC was failing, Bolden urged his club managers to bring in more investors to “keep the lights on,” to deflect suspicion by using new funds to pay earlier investors’ bogus returns, and to satisfy the personal expenses of himself and his cohorts.

Meanwhile, the defendants denied themselves nothing – luxury vehicles, first-class travel, chefs to staff their lavish parties, expensive jewelry and clothes – in order to sustain a pampered lifestyle.

“I worked more than 40 years to build a retirement,” 65-year-old Greg Jerue of Sacramento told Nunley at Friday’s hearing. “Then I met Michael Bolden, Victor Alvarado and Chris Jackson. They sucked me in by the things they said. I lost my 401(k) and the equity in my home. They raped me and my wife of everything we worked for. From 2001 to 2007, they kept up this ruse. They put on an act every day. They had the office, they had the fancy cars, they had the bling. They convinced us they were millionaires. Not a thin dime of our money was invested in real estate.”

In the course of Jackson’s sentencing, Nunley reminded him of a couple whose savings were meant for their grandchildren.

“Those children will now be denied that benefit, while you were going to Las Vegas with suitcases of money to throw your wife a birthday party,” the judge said scornfully. “Your excesses were mind-boggling.”

Some among the crowd of victims in the courtroom addressed the judge. They told chilling stories of shame and degradation, homelessness, health deterioration and even suicide.

Michael Melody, 59, said the $110,000 in home equity the defendants clipped from him and his wife was supposed to pay off his daughter’s student loan. The Sacramento man said he also loaned Jackson $125,000 out of a line of credit.

Addressing Jackson directly, Melody, a letter carrier for 32 years, said, “You had us hanging by a thread with our creditors, while you were partying. You’re a blood-sucking leech, Mr. Jackson.”

Bolden and Alvarado pleaded guilty, Bolden to wire fraud and Alvarado to conspiracy and lying to FBI agents. Jackson went to trial and was found guilty on six counts of wire fraud.

Defense lawyers Etan Zaitsu and Michael Hansen for Bolden, Douglas Beevers for Jackson, and Clyde Blackmon for Alvarado advocated for less time in prison, but they were playing to a tough house. Nunley had little or no sympathy for the defendants.

On cross-examination, Zaitsu tried, with little success, to poke holes in the testimony of Tara Cook, a forensic accountant for the FBI who analyzed the mountain of financial records gathered by agents in connection with the fraud, and then calculated the amount of loss and the number of victims.

The 10-year gap between Jackson’s and Bolden’s sentences makes “it look like (Jackson) is being punished for going to trial,” Beevers told the judge. It is a well-worn argument on behalf of those who, in a multi-defendant prosecution, choose to take their chances with a jury and are convicted.

“You gambled and lost,” Nunley shot back. “Bolden was smart. He took advantage of a favorable offer (from prosecutors).”

Blackmon made an impassioned argument that Alvarado got involved due to “ignorance and inexperience,” and failed at first to recognize the true nature of the DMC operation.

“He won’t reoffend.” Blackmon insisted. The defense lawyer noted that his client has no prior criminal record.

To which Nunley observed, “He hit a home run the first time.”

Assistant U.S. Attorney Jared Dolan said it strained credulity to argue that Alvarado was ever ignorant of what Bolden and Jackson were up to, pointing out that Alvarado “was a banker for a number of years.”

The judge told Alvarado, “At some point you knew what was going on. What got to you was greed, pure greed.”

Arceo, 41, of Sacramento, pleaded guilty to conspiracy and is scheduled to be sentenced Oct. 2. His wife, Erica Arceo, 46, of Sacramento, who was an in-house attorney at DMC, pleaded guilty to conspiracy and is no longer eligible to practice law.

She is scheduled to be sentenced Thursday, as is Garry Bradford, 65, of Sacramento, who operated one of the satellite clubs and pleaded guilty to wire fraud. He used victim money for Ponzi payments and to feed his gambling habit at area casinos.

A hearing is set Nov. 13 on the question of exactly how much restitution is owed by the defendants.

Editor’s Note: This story has been changed from an earlier version to correct the spelling of Tara Cook’s first name. Corrected on Sept. 14, 2014.