FEDERAL JUDGE SENTENCES FRAUDSTER WHO WAS CO-FOUNDER OF GOLDEN GATE REAL ESTATE INVESTMENT TRUST (REIT) TO 84 MONTHS IN FEDERAL PRISON AND ORDERS HIM TO PAY $1.9 MILLION RESTITUTION
DALLAS — At a sentencing hearing that concluded late Friday afternoon, U.S. District Judge Barbara M. G. Lynn sentenced James A. Testa, 61, of Carrollton, Texas, to 84 months in federal prison, announced U.S. Attorney James T. Jacks of the Northern District of Texas. In addition, Judge Lynn ordered that Testa pay $1.9 million in restitution to the 62 identified victims of his crime. Testa pleaded guilty in April 2009 to one count of engaging in monetary transactions in criminally derived property. He must surrender to the Bureau of Prisons by September 27, 2011.
Testa and convicted co-conspirator, Michael R. Rouse, were co-founders and trustees of the Golden Gate Real Estate Investment Trust (REIT). Rouse was convicted at trial in April 2011 on 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 — offenses related to his operation of the Golden Gate REIT. He was sentenced last month, in absentia, by Judge Lynn to 210 months in federal prison and ordered to pay $1.9 million in restitution. Rouse, 56, formerly of Wellington, Florida, remains a fugitive.
During 2003 and 2004, Testa and Rouse, 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 Testa and Rouse 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.
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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