California Man Pleads Guilty To Multi-Million Dollar Fraud Scam
BOSTON – A California man pleaded guilty today defrauding borrowers who sought loans from Quest Capital Finance.
Damien John Hess, 36, of Laguna Niguel, Calif., pleaded guilty to conspiracy to commit wire fraud and seven counts of wire fraud. U.S. District Court Chief Judge Patti B. Saris scheduled sentencing for Feb. 27, 2015 at 2:00 p.m.
Hess, who was the Chief Executive Officer of Quest Capital Finance, stole millions of dollars in deposits from people and companies who sought to borrow money from Quest. Hess, and others working for him, falsely represented that Quest was a financing company that could provide hundreds of millions of dollars of loans for businesses.
From 2008 through 2011, Hess and others at Quest persuaded businesses and individuals to put hundreds of thousands of dollars into escrow accounts, that is, into an account where the funds would be held by a third party until all contingencies for the loan were resolved, as deposits towards future loans. Hess and others at Quest promised the borrowers that the deposits would not be moved out of escrow unless and until the loan was being funded. In fact, shortly after the prospective borrower had deposited the money in escrow, Hess took all or most of the escrowed money and transferred it to his company, and, in some instances, transferred it to his personal accounts. Hess repeatedly took the escrowed funds without actually arranging financing for the borrowers, let alone making the first draws of financing available to the borrowers. In order to prevent prospective buyers from detecting the fraud, Hess, and others acting on behalf of Quest, continued to promise the prospective borrowers that Quest would soon be providing millions of dollars of financing. Quest did not provide financing nor did it refund the purportedly escrowed or refundable deposits.
The charging statutes provide sentences of no greater than five years in prison for the conspiracy count and 20 years in prison for each for the wire fraud counts, three years of supervised release, and a $250,000 fine or twice the gross loss or gain, whichever is greater, restitution and forfeiture. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
United States Attorney Carmen M. Ortiz; Vincent B. Lisi, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division; and Shelly Binkowski, Inspector in Charge of the U.S. Postal Inspection Service, made the announcement. The case is being prosecuted by Assistant United States Attorneys Sara Miron Bloom of Ortiz’s Economic Crimes Unit, Patrick Callahan of the Civil Division and Doreen Rachal of the Asset Forfeiture Unit.