FEDERAL JURY CONVICTS GOLDEN GATE REAL ESTATE INVESTMENT TRUST (REIT) FOUNDER
DALLAS — Following a week-long trial before U.S. District Judge Barbara M. G. Lynn, a federal jury has convicted Michael R. Rouse on all nine counts of a superseding indictment charging various felony offenses related to his operation of the Golden Gate Real Estate Investment Trust (REIT), announced U.S. Attorney James T. Jacks, of the Northern District of Texas. Rouse, 56, of Wellington, Florida, is on bond currently and is scheduled to appear before Judge Lynn for a hearing to determine whether he will remain on bond until sentencing.
“The U.S. Attorney’s Office and the Department of Justice, in concert with its agency partners such as the IRS-Criminal Investigation Division and the Texas State Securities Board, are committed to identifying and prosecuting those unscrupulous individuals who seek to steal the hard-earned savings of the citizens of this community,” said U.S. Attorney Jacks. “Investors need to ask questions and take steps to insure that their funds are used in the manner promised by the individuals in charge of these investment plans. Likewise, those who solicit money from these investors need to know that false statements, exaggerated promises and misrepresentations about the use and placement of customers funds can result in not just lawsuits, but long prison sentences as well.”
“These high-yield investment fraud schemes, which can be likened to a house of cards, eventually collapse and frequently leave unsuspecting investors in financial ruin,” said IRS Special Agent in Charge Andrea D. Whelan. “The only people who consistently make money are the scheme promoters. The IRS, Criminal Investigation Division, is proud to join forces with the U.S. Attorney’s Office and our law enforcement partners to bring criminals, who make a living preying on others, to justice.”
The jury found Rouse guilty of one count of conspiracy to commit securities fraud, mail fraud and money laundering; two counts of securities fraud and aiding and abetting; five counts of mail fraud; and one count of money laundering. Maximum statutory sentences, upon conviction are: for the conspiracy count and each of the securities fraud counts, five years in prison and a $250,000 fine; for each of the mail fraud counts, 20 years in prison and a $250,000 fine; and for the money laundering count, 10 years in prison and a $250,000 fine. The indictment also includes a forfeiture notice that requires Rouse, upon conviction, to forfeit property or funds derived from proceeds traceable to his offense.
The government presented evidence at trial that, during 2003 and 2004, Rouse and convicted co-conspirator James A. Testa, 61, of Carrollton, Texas, were founders and trustees of the Golden Gate REIT. During that period, Rouse and Testa, acting personally and through brokers, raised more than $2 million from investors by claiming that the REIT was a safe investment in real estate and real estate related assets. In fact, virtually none of the money was ever invested in anything connected with real estate. The only investments Rouse and Testa ever made were in foreign currency trading, and those investments failed completely.
The investors lost most or all of their money, while Testa and Rouse paid themselves handsome salaries and spent the investors’ funds on business and personal expenses, including Mercedes Benz automobiles that cost more than $125,000 each. Testa, who testified for the government at trial, pleaded guilty to one count of money laundering in 2009; his sentencing date has not been set.
The interagency Financial Fraud Enforcement Task Force was established by the President to lead an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit StopFraud.gov.
The Financial Fraud Enforcement Task Force in the Northern District of Texas includes representatives from the FBI, U.S. Postal Inspection Service, IRS-Criminal Investigation, U.S. Secret Service, U.S. Securities and Exchange Commission (SEC), Texas State Securities Board, Texas Attorney General, FDIC Office of Inspector General, Commodity Futures Trading Commission, Federal Reserve Board of Governors, Office of Thrift Supervision, Comptroller of the Currency, Financial Industry Regulator Authority, and National Futures Association.
The case was investigated by IRS-Criminal Investigation and the Texas State Securities Board. Assistant U.S. Attorney Alan M. Buie and Special Assistant U.S. Attorney Suzanne M. Steinmetz prosecuted.
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