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 did not yield outcomes.
Whether or not it’s refining your enterprise mannequin, mastering new applied sciences, or discovering methods to capitalize on the subsequent market surge, Inman Join New York will put together you to take daring steps ahead. The Subsequent Chapter is about to start. Be a part of it. Be a part of us and hundreds of actual property leaders Jan. 22-24, 2025
Embattled Bellevue-based funding agency iCap may very well be dealing with its finish after a federal decide within the Yakima chapter court docket dominated the corporate’s former leaders defrauded buyers of $230 million in a multi-year Ponzi scheme.
First reported by The Seattle Instances 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 an alternative 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.” Nevertheless, an impartial 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 wanting 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 charge of return.
A restructuring agency took over iCap final yr and started promoting off the corporate’s portfolio. As of October, the agency has offered 15 properties for $19 million and is engaged on promoting the remainder. Nevertheless, nearly all of the gross sales proceeds have gone towards chapter proceedings, which means not one of the buyers have been repaid.
The Seattle Instances mentioned Holt’s ruling gives the groundwork for future lawsuits in opposition to 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 informed The Seattle Instances he “strongly disputes the allegation that iCap operated as a Ponzi scheme.”
