SANTA MONICA—The U.S. Department of Justice announced on January 17, that Derek Jones, 48, of San Marino, was sentenced to five and a half years in prison for running fraudulent investment funds and one count of wire fraud. Jones defrauded investors of over $8.6 million.
Victims of his scheme invested money in companies and funds he had control of, such as “BlueRidge,” “Living City,” “Atiswin” and “Realize Holdings” (a venture capital firm), between 2012-2019. Jones claimed he had real estate developments including a “resort village” and an existing hotel he claimed to control on Semiahmoo Spit in Washington State, as well as a ranch in Colorado and other properties in California, including in Santa Monica, Hermosa Beach, and Los Angeles.
He did not own those properties but instead used victim’s investments for his personal use, including private-school tuition for his children and to make “Ponzi-style” payments to other investors to whom he owed money in connection with earlier transactions.
Part of his scheme included doctored bank statements, fake financial statements and contractual agreements, brochures, forged land leases, and fictional asset allocations to investors. He also used other individuals’ names in email communication to persuade investors his businesses were viable.
On multiple occasions, Jones provided doctored bank statements showing that he had millions of dollars in various corporate accounts, when in fact he had little or no money in such accounts. On other occasions, he provided counterfeit financial statements that falsely purported to be based on internal audits of companies that he controlled.
Jones’ license to practice law was suspended as a result of his actions and he was disbarred.
U.S. Attorney Damian Williams stated:
“When investors purchase shares in real-estate funds and other investment funds, those investors have every right to expect that the people promoting and selling those investments are treating them honestly and telling them the truth about their investments. Today, Derek Jones, a disbarred attorney, was held accountable for violating this right over an extended period, selling interests in real estate that he falsely claimed to own and defrauding his investors out of millions of dollars.”
In November 1, 2021, Jones plead guilty to a single count of wire fraud. His conviction also includes three years of supervised release, forfeiture of $8,679,787.66, and restitution to his victims in an amount to be determined within the next 90 days.
The judge assigned to this case was United States District Judge Loretta A. Preska.