LOS ANGELES – The owner of an Orange County real estate finance business was sentenced today to 63 months in federal prison for fraudulently obtaining nearly $6.2 million, most of which he took by making false promises to an investor that shares of his private company were about to be publicly traded on the Nasdaq stock exchange.
Jacques Poujade, 63, of Irvine, was sentenced by United States District Judge Mark C. Scarsi, who also ordered him to pay $6,170,600 in restitution.
Poujade pleaded guilty on July 24 to one count of securities fraud.
Poujade is the owner and chief financial officer of Tri-Emerald Financial Group, a Lake Forest-based realty services company that operated as a residential mortgage lender. Tri-Emerald funded loans as a mortgage banker, with the intent to hold the funded loans for immediate resale to financial institutions that purchased the loans for investments. Neither Tri-Emerald nor its securities were ever registered with the United States Securities and Exchange Commission.
From February 2015 to May 2020, Poujade sold unregistered securities to a victim investor by telling the victim a series of lies, including about the timing and likelihood of Tri-Emerald’s initial public offering (IPO) and the resulting share price. The victim purchased shares in Tri-Emerald at $10 per share, after Poujade represented they were “securities” under federal law and would exceed the price of $100 per share once the company went public.
Poujade falsely promised the victim that Tri-Emerald was a pre-IPO opportunity that would provide high returns when the company soon went public on Nasdaq. In fact, Tri-Emerald had not completed the necessary steps to undertake an IPO, including filling out the required SEC paperwork or formally engaging the investment banks Poujade falsely told the victim he had engaged as underwriters.
He further lied to the victim by saying one investment bank “was super excited about moving forward” and estimated that Tri-Emerald would “be a billion dollar company in under 16 months,” according to his plea agreement.
He also said Tri-Emerald was using the victim’s investment to cover IPO costs when, in fact, Poujade used a substantial portion of the funds for general Tri-Emerald operating expenses and to make lulling payments and litigation settlement payments to previous Tri-Emerald investors. Poujade also used a portion of the funds for personal expenditures in lieu of taking a salary.
“Particularly troubling is that in executing his scheme to defraud, [Poujade] ruthlessly preyed upon [the victim] to drain her of her entire life savings,” prosecutors argued in a sentencing memorandum. “[Poujade] not only conned [the victim] out of her money but he did so by betraying her trust after forging an intimate and faith-based relationship with her.”
In total, Poujade fraudulently obtained approximately $5,255,600 from the victim.
Poujade also defrauded another victim and that victim’s investment group in July 2016 by convincing them to purchase 30-day promissory notes issued by LendPlus Holdings, another one of Poujade’s companies. These notes purportedly were to be used to increase Tri-Emerald’s warehouse line of credit, which would allow Tri-Emerald to fund a larger volume of mortgages.
At the end of the term of the 30-day promissory notes, instead of repaying victim investors, Poujade continuously rolled victim investors’ funds over into the next month. On numerous occasions, Poujade lulled the victims by falsely claiming their money was safe in a reserve account and LendPlus was using their funds to improve Tri-Emerald’s loan production and line of credit.
In fact, Poujade used a substantial portion of these funds to make lulling payments to previous Tri-Emerald investors, to pay Tri-Emerald’s operating expenses, and for his own personal use, including paying rent on his residence.
Poujade defrauded these investors out of approximately $915,000.
The FBI and the United States Department of Housing and Urban Development Office of Inspector General investigated this matter.
Special Assistant United States Attorney Ryan G. Adams of the Corporate and Securities Fraud Strike Force prosecuted this case.