Vesta Strategies Chief Executive Officer sentenced To 66 Months Imprisonment For Ponzi Scheme
SAN JOSE, Calif. – Robert Estupinian was sentenced yesterday in federal court to 66 months in prison for conspiring to defraud the clients of Vesta Strategies, United States Attorney Melinda Haag announced. He was also ordered to pay full restitution, in an amount to be determined by the Court.
Estupinian, of San Jose, Calif., was the minority owner and chief executive officer of Vesta. The company was a qualified intermediary for the purpose of conducting tax-deferred real estate exchanges pursuant to Internal Revenue Service Code Section 1031 (26 U.S.C. § 1031).
Vesta, previously based in San Jose, Calif. collapsed in July of 2008 with approximately $25 million owed to its Section 1031 depositors. Vesta lacked the ability to meet its redemption obligations because its owners, including Estupinian, and managers misappropriated the money themselves, and because new client deposits were used to pay off existing depositors.
The indictment alleged that Estupinian, along with John Terzakis, Vesta’s majority owner, and Peter Ye, the former vice president of operations, and later president, used the company to defraud Vesta clients of their Section 1031 deposits, and obtained money and property, namely, Vesta client deposits, by means of materially false and fraudulent pretenses. Among the false promises alleged were claims that Vesta was a safe and financially secure Section 1031 exchange company, that Vesta client deposits would be held by Vesta, and that Vesta client deposits would be returned at the time of redemption. The indictment alleged that new client deposits were used to pay off existing client obligations, in a Ponzi-like manner, in furtherance of the conspiracy. The indictment also alleged that the Vesta owners diverted Vesta client deposits to themselves.
In pleading guilty, Estupinian, admitted to conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (count one); wire fraud, in violation of 18 U.S.C. § 1343 (count five); and money laundering, in violation of 18 U.S.C. § 1957 (count eight).
Co-defendant Ye, of San Jose, Calif. pled guilty on June 21, 2010, to three felony counts of conspiracy to commit wire fraud, wire fraud, and money laundering. He remains free on a bond, and is scheduled to be sentenced on Dec. 20, 2012. His related case is CR 10-00044 DLJ.
Co-defendant Terzakis, of San Jose, Ill., pled guilty to three felony counts and was sentenced on Sept. 27, 2012, to a term of 84 months in prison. Terzakis is currently on home confinement with electronic monitoring, secured by a bond, and is ordered to self-surrender on Dec. 4, 2012.
Estupinian is currently out of custody, secured by a bond, and is ordered to self-surrender on Jan. 15, 2013.
Daniel Kaleba is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Kamille Singh. The prosecution is the result of an investigation by the Federal Bureau of Investigation, and the Santa Clara County Office of the District Attorney.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.