A Scottsdale man was sentenced to five years in prison, followed by seven years probation and more than $3.1 million in restitution for operating elaborate investment schemes that defrauded at least 42 people of more than $3 million since 2005.
According to Arizona Attorney General Terry Goddard, Charles Bruce Ferguson was indicted in January and November, and pleaded guilty last month to two counts of theft, a class 2 felony. Assistant Attorney General Todd Lawson prosecuted the case in Maricopa County Superior Court.
In 2005 and 2006, Ferguson allegedly solicited seven people to invest $5,000 to $50,000 in a project to purchase a Mesa apartment complex and convert it into condominium units to be sold. Ferguson raised $165,000, not enough to purchase the complex, and about $100,000 was spent on fees and other costs associated with holding the monies in escrow.
According to court documents, Ferguson did not disclose to investors that such a loss was possible. Also, at the time the project fell through, Ferguson allegedly made numerous verbal and written misrepresentations to investors to cover up the losses, including falsifying documents that purported to be from Washington Mutual and the city of Mesa.
Victims did not receive any of the promised returns, and most lost their principal investment as well, according to Goddard.
In a second scam from 2006 to 2008, Ferguson allegedly solicited investments to purchase multimillion-dollar bank instruments, such as certificates of deposit or lines of credit. Investors allegedly were instructed to wire money under an agreement that the funds would be held as collateral in an account until the investment paid out over the course of several months.
Ferguson, however, allegedly altered the investment agreements without investors' consent to allow him immediate access to the funds, and when the time came for the investment to begin paying out, he again covered up the true reasons for failing to provide returns to investors as he had promised. Investigators never found evidence that the instruments were ever actually purchased.
Numerous victims invested in the program after learning about it through Craigslist. They were promised returns of up to $800 million over a short period of time. In some cases, Ferguson also promised that the investments would be used to fund global humanitarian efforts that paid a high rate of return.
Ferguson, who was not licensed to sell securities, allegedly used the victims' money to purchase a Scottsdale condominium, a luxury car, more than $150,000 in high-end jewelry, at least $30,000 in tickets for luxury seats at local sporting events and $30,000 in private jet rental fees. Another $100,000 was traced to an offshore tax haven.
Forfeiture of these assets is pending.