On December 7th, 2016

Ten Year Sentence for Man Convicted in $11 Million Ponzi Scheme A California Department of Insurance investigation

csleaSANTA ANA – On December 5, 2016, an Orange County man was convicted and sentenced to 10 years in state prison for running an $11 million Ponzi scheme and victimizing more 27 people with sale of unsecured securities based on fraudulent insurance policies.

In a court offer, Joseph Francis Bartholomew, 77, of Lake Forest, pleaded guilty to 29 felony counts with sentencing enhancements for aggravated white collar crime over $500,000 and loss greater than $3.2 million. In addition to prison, Bartholomew was ordered to pay restitution.

Co-defendant Wendy King-Jackson, 56, Laguna Niguel, pleaded guilty to two felony counts of the use of an untrue statement or omission about the purchase or sale of a security.  She faces six years in prison at her sentencing which has been scheduled for a later date.

“When a victim reported this crime to the California Department of Insurance, investigators went to work,” said California Statewide Law Enforcement Association President Alan Barcelona.  “These individuals targeted senior citizens with the sale of unsecured securities.”

Bartholomew and King-Jackson conducted in a “Ponzi scheme,” which is a fraudulent operation that offers investors high, short-term returns on investments. Instead of using the money to generate actual income and legitimate profits, the money from the investors is kept for the benefit of the defendant or used to repay earlier investors.

Bartholomew owned and operated MBP Insurance Services, Inc. (MBP), which offered and sold unsecured securities based on fraudulent insurance policies. Between July 2005 and May 2014, Bartholomew defrauded over 27 investors, most of whom were senior citizens, and falsely promised them he would provide a return of 15 to 40 percent in interest from their investment.

King-Jackson worked at MBP as an insurance agent and offered and sold unsecured securities based on fraudulent insurance policies by misleading clients that the policies were legitimate and legal investments when they were not. King-Jackson failed to disclose to clients that the California Department of Corporations (now “California Department of Business Oversight”) did not authorize MBP to sell the securities, as required by law, and did not inform clients of the risks associated with the investments as required by industry practice.

In September 2011, Bartholomew failed to pay monthly interest payments to investors, and by March 2013, all monthly payments to investors ceased. Bartholomew collected more than $11.3 million from investors.

In May 2014, Bartholomew offered an unsecured investment to John Doe claiming that he would pay him $10,000 monthly for a $500,000 investment. The defendant fraudulently assured John Doe that he was making a legitimate investment on stranger-third party life insurance policies and stated he had no difficulties in paying back any of his other investors for the past 10 years.

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