Sacto 9-1-1
September 14, 2012
Seven indicted in $100 million Ponzi scheme

By Denny Walsh and Sam Stanton

dwalsh@sacbee.com

After at least four years of investigation, federal authorities announced sweeping indictments of seven businessmen who they say ran the largest Ponzi scheme in the history of the region.

Lee Loomis and his father-in-law, John Hagener, were charged along with five associates in an indictment unsealed today that accuses each of 19 counts of mail fraud and 31 counts of wire fraud.

Federal authorities have said losses from the scheme the men allegedly pioneered could top $100 million and affected investors nationwide who poured their life savings and retirement accounts into bogus business deals that offered them returns as high as 12 percent.

Instead, authorities say, Loomis and his confederates used a constant stream of money from new investors to pay "returns on investments" to the old ones and finance their own lavish lifestyles. The Loomis plan allegedly enticed investors into buying second mortgages with promises of high returns on their money.

Federal prosecutors say the money instead went into the pockets of the indicted men, who put off questions from investors by producing account statements showing they had $10 million in holdings to pay investors. The accounts actually held about $200,000, the indictment alleges.

Authorities have been investigating Loomis since at least 2008, when the economic collapse ended regular payments to investors and caused them to complain to law enforcement. Agents raided the offices in Roseville and Loomis' home in Granite Bay and carted away all the books and records, effectively putting them out of business.

Through the years, the investigation has led to numerous other defendants facing charges, as well as four of them fleeing the country. Three of those have since been returned to the United States to face charges.

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