The owners of Newport Beach-based BNZ Capital One are facing charges in connection to a Ponzi scheme revolving around a property-flipping investment plan.
According to NBCLA, Louis Alfonso Zimmerle has agreed to a plea deal, admitting to a felony count of wire fraud, while his business partner, Brett Reed Barber, has been arraigned on four counts of wire fraud and two counts of money laundering.
Facing a Securities and Exchange Commission complaint, the co-owners allegedly raised at least $13.5 million from more than 100 investors since June 2019, according to the SEC. Zimmerle and Barber promised 10 percent annual returns on the investments, however the SEC alleges that less than $5,000 in profits were generated from said investments.
Prosecutors allege that the two took investor cash to repay other investors in a Ponzi scheme.
“Since BNZ’s inception, however, BNZ has not been profitable because its investments—when Barber and Zimmerle actually made investments—have not generated enough profit to return investor principal and pay the promised returns,” according to the SEC. “Despite BNZ’s miniscule profits, BNZ transferred more than $1.6 million to [Guaranteed Income Solutions] and more than $700,000 to Zimmerle, while also paying certain of Barber’s and Zimmerle’s personal expenses, including for vehicles.”
Losses due to the alleged scheme amount to about $9 million. In his plea agreement, Zimmerle admitted that he kept $582,815 of investor money.