Lawrence Leland “Lee” Loomis, who prosecutors say ran one of the biggest Ponzi schemes in the history of the region and conned investors in six states, pleaded guilty to a single count of wire fraud Friday in federal court in Sacramento in a deal that could send him to prison for 18 years.
The guilty plea before U.S. District Judge John A. Mendez came after years of investigation and just before the start of his trial, which was scheduled for Feb. 8.
Loomis, 58, entered his plea in a brief hearing as he stood before Mendez dressed in orange Sacramento County jail garb and clasping his hands behind his back. The tall, white-haired Loomis said little as Mendez set sentencing in the case for May 10. Loomis has been in custody since September 2012.
The charge Loomis pleaded guilty to carries a maximum sentence of 20 years and a $250,000 fine. Assistant U.S. Attorney Paul Hemesath said the government was seeking an 18-year sentence, although Mendez could reject that. The judge also can order restitution payments of up to $50 million under the plea agreement.
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The deal also calls for Loomis to forfeit $462,299.28 held in two bank accounts that were seized by the government.
While Loomis was under investigation, authorities estimated that as much as $100 million in investor funds may have been lost, although the U.S. attorney’s office gave a different estimate Friday.
“In his plea agreement, Loomis admitted that the funds were not used as was promised to investors,” the U.S. attorney’s office said in a statement. “Instead, Loomis and his co-defendants used the funds to pay for ongoing operations and to pay previous investors.
“Loomis took in more than $10 million in investor funds, defrauding more than 50 individuals. At the time law enforcement executed search warrants at the business, only $4,313 was left in investor accounts.”
U.S. Attorney Benjamin Wagner said the “guilty plea brings to an end Lee Loomis’ long and destructive scheme to defraud investors.”
“While it is doubtful that investor victims will ever be made whole, Loomis has been brought to justice, and he will never again be in a position to cause financial harm to others,” Wagner said.
Among the vast rogue’s gallery of real estate con men who have been prosecuted in the Sacramento region since the economic crash in 2008, Loomis stood out as one of the most colorful.
He had a $1.9 million Granite Bay home and earned $400,000 a year, living a life filled with luxury sport-utility vehicles and pronouncements about Christian values and the benefit of hard work.
Through a Roseville company called Loomis Wealth Solutions, Loomis promised 12 percent returns to investors he wooed through seminars hosted at hotels and casinos. At these two-day sessions, Loomis and his associates spelled out the wealth individuals could realize through purchases of life insurance policies or investments in real estate and a “special” $10 million fund.
During the boom times before the recession hit, Loomis promised investors “simply the best financial plan ever created,” and steered many into purchases of homes and condominiums in California, Florida, Arizona, Colorado, Nevada and Illinois, prosecutors have said. Those were what he called his “Tier 3” investors, who prosecutors say were told Loomis would cover the mortgages, taxes and insurance and rent out the homes, then pay the investors at least $300 a month in return.
But when the crash came, cash got short. Prosecutors say Loomis covered his payments to investors by reeling in new ones and forging buyers’ names on home contracts.
Loomis’ financial empire was so complex that agents spent years investigating him before his indictment in 2012 on 50 counts of mail fraud and wire fraud.
By then, agents already had targeted a number of his associates, including his father-in-law, John Hagener, who lost $870,000 investing in the deal and agreed to cooperate with prosecutors and testify against Loomis at trial.
Hagener agreed to plead guilty to conspiracy and is awaiting sentencing, his attorney, William Portanova, said Friday.
“Hopefully, this closes another chapter in this long and painful ordeal for this family,” Portanova said. “I know that John Hagener is looking forward to life after this case.”
Four other suspects fled the country as the financial empire collapsed and authorities closed in.
One, Scott Edward Cavell, ended up under arrest in Ireland on a marijuana charge before returning and receiving a five-year sentence.
Another, Christopher Jared Warren, took off on a chartered jet loaded down with $5 million in gold and $500,000 in cash and ended up in Lebanon. He was later arrested trying to cross back into the United States from Canada with $70,000 stuffed inside his cowboy boots, and eventually was sentenced to 14 years and seven months in prison.
Despite the evidence authorities compiled over the years, Loomis continued to fight the case until Friday’s hearing.
After his arrest in 2012, Assistant U.S. Attorney Russell Carlberg told a judge that Hagener understood the situation he was facing, but that the same was not true for Loomis.
“Mr. Loomis doesn’t get it,” Carlberg said at the time. “He’s in denial.”