A California woman behind a real estate ponzi scheme that deceived both investors and homeowners has been sentenced to 12 years in prison and ordered to pay an $8.5 million fine, according to a U.S. Department of Justice press release (“Woman Who Promised to Help Homeowners Avoid Foreclosure Sentenced to Over 12 Years in Prison for Taking Millions From Investors in Fraudulent Scheme,” Jan. 20, 2009).In a scam that targeted 600 African-American real estate investors spanning California, Nevada and Georgia, and promised relief to distressed homeowners in foreclosure, Jeanetta Standefor bilked investors out of about $18 million dollars by promising them “virtually risk-free” returns of up to 50 percent. Her company, Accelerated Funding Group, was to use the funds to help bring homeowners on the brink of foreclosure current on their mortgages.

Instead of generating the promised returns and helping homeowners, Standefor used money from new investors to subsidize “returns” to current investors in order to continue the ponzi scheme.

In September of 2008, according to the U.S. Department of Justice, Standefor plead guilty to two counts of mail fraud, known as “affinity fraud.” The fraud is targeted at a specific community, in this case, African American investors.

AFG assured its investors that their money was secure and guaranteed that their funds would be returned to them within 72 hours of making a request. Not only did AFG ignore investment refund requests, but the money was never used to help homeowners in foreclosure.

According to the FBI investigation, Standefor instead used more than $1.9 million of investors’ money to pay for personal expenses that included cars, home renovations, expensive jewelry, entertainment, and her lavish wedding and honeymoon.

“Ms. Standefor exploited the housing crisis for her own benefit with false promises of help for troubled homeowners and fictitious profits for those willing to help,” said United States Attorney Thomas O’Brien. “While there are legitimate companies that work with distressed homeowners, investors and mortgage holders must carefully consider any offer of assistance, particularly when there are suspicious promises that seem too good to be true.”

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