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Press Release

Former Chief Executive Officer Sentenced to 16 Months in Federal Prison for Investment Fraud Scheme

For Immediate Release
U.S. Attorney's Office, Eastern District of Wisconsin

Gregory J. Haanstad, United States Attorney for the Eastern District of Wisconsin, announced that on July 24, 2023, Joseph Nemeth (age: 53) of Germantown, Wisconsin, was sentenced to 16 months in federal prison for carrying out an investment scheme that defrauded over 20 victims and caused a loss of at least $2.2 million. Nemeth had earlier pleaded guilty to one count of wire fraud, in violation of 18 U.S.C. § 1343.

The information presented at sentencing showed that Nemeth partnered with another individual to form a real estate business, Wisconsin Home Buyers Network, LLC (WIHBN), of which Nemeth was the Chief Executive Officer. Between 2012 and 2018, the partners solicited and obtained from more than 20 investors approximately $2.8 million, promising little or no risk and monetary returns ranging from 12% to 36%. In return, investors received promissory notes detailing the investment terms. Some investors also received mortgages that purported to be for specific properties to be acquired and rehabilitated with the investor’s funds, although the partners failed to record all but a few of the mortgages.

Contrary to promises that the investor funds were secured by the assets of a successful and profitable business, WIHBN had business debt, delinquent tax obligations, and other financial issues that made the business unable to timely make payments on the promissory notes. Rather than being used for the promised investment purposes, investor funds were comingled with other funds and were used for Ponzi-type payments to existing investors, payroll for related businesses, debt reduction, personal draws by the partners, back taxes, and legal fees. When the partners were unable to pay as the promissory notes came due, they sought extensions, solicited additional funds from existing investors, and attempted to secure new investors. In the end, less than $400,000 of over $2.8 million in investor funds was returned to investors.

Several victims filed impact statements with the court prior to sentencing, and one victim made in-person remarks during the sentencing hearing. These victims explained to the court how the scheme caused them significant financial and emotional harm.

This case was investigated by the Federal Bureau of Investigation and the U.S. Department of Labor, Employee Benefits Security Administration. Assistant U.S. Attorney John P. Scully and former Assistant U.S. Attorney Carol L. Kraft prosecuted the case.

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Updated July 25, 2023