OT(?)
sounds a bit like ol Bily Sol?
Thursday December 28 08:33 PM EST
Sec Accuses Alameda Firm of $70 Million Fraud
By KPIX - BCN
Bay City News Service
The U.S. Securities and Exchange Commission has accused an Alameda company of cheating investors out of more than $70 million in an allegedly fraudulent Southern California development deal. Federal prosecutors say Pacific Genesis Group Inc., led by financier David Fitzgerald, has misled investors on the value of land purchased near the Mohave Desert and used the false appraisal to garner tens of millions of dollars toward a planned community on the site.
Although the series of investment deals are more than four years in the making, prosecutors say not a single road has been paved nor a single home built of the Rancho Lucerne Master Planned Community. Robert Mitchell, administrator for the SEC's San Francisco District Office, said the agency worries the bottom will fall out on the development. He said the site itself, located about 50 miles northeast of San Bernardino, sits on isolated and arid land "on the edge of the Mohave Desert."
According to Mitchell, an appraisal commissioned by Pacific Genesis put the land's value at about $28,000 an acre, but "what we say is the land is really worth no more than $5,000 an acre today." Not so, says Fitzgerald, who maintains that 200 lots have already been sold on the 1,375-acre site at a value of $35,000 to $90,000 per lot -- figures he says support the company's appraisal. Fitzgerald said six miles of water and sewer improvements have been made, a golf course built and streets are ready to be paved. "We find the allegations to be entirely ridiculous," he said, adding that "not a single investor (is) complaining about what's going on here."
He said the investors are generally wealthy individuals and small firms. Fitzgerald described Pacific Genesis, founded in 1995, as a small company of 15 employees and a value of about $500,000. "We're not Merrill Lynch," he said.
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