A partner at a hard money lender has been convicted of swindling investors out of millions of dollars.
APS Funding Inc. provided short-term, high-interest hard-money loans for business and real estate development purposes. Several funds established by the entity included GCF Investment LLC and the Greenlight Fund.
Investors were recruited by the APS partners and assured that their money would be used to fund hard-money loans.
According to the Department of Justice, investors plowed in more than $5 million from 2007 until 2009.
But few borrowers were interested in loans from APS, and few hard-money loans were actually funded.
Instead, according to the government, more than 90 percent of the funds were diverted to the partners for their personal use.
One of the APS partners, Michael Swanson, was convicted by a federal jury on Tuesday, a news release from the U.S. Attorney for the Northern District of California said.
Swanson was convicted of one count of conspiracy to commit mail and wire fraud, 12 counts of mail fraud, 14 counts of wire fraud and one count of securities fraud. He was acquitted of one count of mail fraud and one count of securities fraud.
Swanson is scheduled for sentencing on Dec. 18.
Co-defendant Beth Pina pled guilty in December 2012 and is scheduled for sentencing on March 14, 2014.
In October 2010, the Securities and Exchange Commission filed a lawsuit against APS, Swanson, Pina and APS President Barbra Alexander in the same federal court. The SEC alleged that $2.5 million out of $7.9 million in funds from nearly 60 investors was misappropriated.
Monterey, Calif.-based APS was formed in November 2006 and continued to operate until 2010.
