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Press Release

Mission Viejo Man Agrees to Plead Guilty to $2.3 Million Real Estate Investment Fraud Scheme

For Immediate Release
U.S. Attorney's Office, Central District of California

            LOS ANGELES – A Mission Viejo man has agreed to plead guilty to taking more than $2,300,000 from investors in a fraudulent real estate investment scheme in which he used investor funds to pay for personal expenses, including travel and cosmetic surgery, to make cash withdrawals, and to make Ponzi-style payments to other investors.

            Francisco “Frank” Hobson, 39, was named in a criminal information last Friday charging him with wire fraud. A plea agreement in the case was also filed, and, in the plea agreement, Hobson has agreed to plead guilty to the information and pay at least $1,584,941 to the victims of his crime. Hobson is expected to appear to be arraigned on the charge in the information this afternoon.

            The information charges Hobson, who was at the time a licensed real estate agent, in connection with his scheme of luring victims to give him money, between December 2010 and June 2016, with his promises that their investments would be used to purchase properties. In reality, the properties that Hobson advertised to his victims were not actually for sale or simply did not exist, and Hobson sent victims purported purchase agreements for the properties which were fraudulent or forged.

            Hobson continued to engage in the scheme for months after being interviewed in November 2015 by the Federal Bureau of Investigation in connection with complaints from two of his victims.

            “The defendant made simple promises to his victims, promises he never intended to fulfill,” said United States Attorney Eileen M. Decker. “The defendant then used his victims’ hard-earned money to fund his personal lifestyle. That he continued to do so after law enforcement had interviewed him was all the more egregious.”

            As detailed in the plea agreement, Hobson would tell investors to transfer money to “escrow accounts,” which were, in reality, his own bank accounts that he alone controlled. After the investors’ money was deposited in his accounts, Hobson used the money for personal purchases at grocery stores, chain restaurants, and retail stores, as well as making cash withdrawals. Hobson also used their money to pay his landlord, and for travel, laser hair removal, and plastic surgery. Furthermore, Hobson paid approximately $757,031 of the $2,339,473 he collected in the scheme to his victims as Ponzi-style payments designed to conceal and extend the length of the scheme.

            “The defendant targeted Hispanic individuals and presented himself as someone they could trust in a classic affinity scheme, only to spend their money to live lavishly,” said Deirdre Fike, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Mr. Hobson’s chronic criminal behavior even after an investigation was underway is a reminder that caution should be exercised before handing over large sums of money, even when someone appears to be in a position of trust, or when someone with a similar background is offering an investment opportunity.”

            Wire fraud carries a statutory maximum penalty of 20 years in federal prison. The case against Hobson was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Anil J. Antony of the Cyber and Intellectual Property Crimes Section.

Updated October 3, 2016

Press Release Number: 16-236