Executives of funding agency iCap ran the scheme from 2013 to 2022, a federal chapter decide dominated this week. They turned to the scheme when their actual property portfolio didn’t yield outcomes.
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Embattled Bellevue-based funding agency iCap may very well be dealing with its finish after a federal decide within the Yakima chapter courtroom dominated the corporate’s former leaders defrauded buyers of $230 million in a multi-year Ponzi scheme.
First reported by The Seattle Occasions on Friday, Chief Choose Whitman Holt mentioned in an Oct. 15 ruling “there is substantial, if not overwhelming, evidence” that iCap used buyers’ cash to repay different buyers, as a substitute of paying them month-to-month curiosity funds from a number of actual property growth initiatives within the Higher Seattle Space.
Traders’ attorneys mentioned former iCap leaders Chris and Jim Christensen repeatedly assured buyers that the developments they’d invested in had been “actively generating profits.” Nonetheless, an unbiased audit of iCap’s data revealed the corporate solely earned $1.4 million in earnings from 2013 to 2022 — which means the Christensens had been $228.6 million in need of what they promised to pay buyers.
“They would have been better off just putting the money in Treasury bonds and letting it sit there,” Holt mentioned of iCap’s low fee of return.
A restructuring agency took over iCap final 12 months and commenced promoting off the corporate’s portfolio. As of October, the agency has bought 15 properties for $19 million and is engaged on promoting the remainder. Nonetheless, nearly all of the gross sales proceeds have gone towards chapter proceedings, which means not one of the buyers have been repaid.
The Seattle Occasions mentioned Holt’s ruling supplies the groundwork for future lawsuits towards the Christensens and different entities concerned within the scheme. Traders could possibly get a tax deduction for the monies they invested in iCap, the article mentioned.
Jim Christensen declined to touch upon the ruling. Chris Christensen instructed The Seattle Occasions he “strongly disputes the allegation that iCap operated as a Ponzi scheme.”
