Four Defendants Indicted for Securities Fraud, Conducting International Pump-and-Dump Scheme, and Money Laundering
Assistant U. S. Attorneys Oleksandra Johnson (619) 546-9769 and Valerie H. Chu (619) 546-6750
NEWS RELEASE SUMMARY – January 3, 2022
SAN DIEGO – Alexander Avergoon, a longtime San Diego real estate agent and businessman, was sentenced in federal court today to 64 months in prison for defrauding investors in several Ponzi real estate investment schemes. As part of his guilty plea, Avergoon also admitted to participating in multiple tax evasion and fraud schemes with Rabbi Yisroel Goldstein, former director at Chabad of Poway.
Avergoon was ordered to pay $9,679,306.70 in restitution to several victims. The Court also ordered Avergoon to forfeit to the United States the amount of $5,205,234.41 as proceeds of illegal conduct and property involved in the offense.
“This defendant is a prolific fraudster who has stolen millions of dollars from the many victims of his devious schemes,” said U.S. Attorney Randy Grossman. “It’s now his turn to pay the price for his crimes.” Grossman thanked the prosecution team, the FBI and the IRS for their dedication to achieving justice in this matter.
“The defendant participated in complex financial schemes which defrauded private citizens out of millions of dollars,” said FBI Special Agent in Charge Suzanne Turner. “The FBI will continue to work with our law enforcement partners to root out all forms of financial fraud which not only hurt the victims, but also negatively impact those who rely on individual donors and investors to conduct legitimate business.”
“Mr. Avergoon victimized dozens of investors twofold, by not only swindling them out of millions of dollars, but also recruiting victim-investors to commit tax fraud,” said Special Agent in Charge Ryan L. Korner of IRS Criminal Investigation’s Los Angeles Field Office. “Today’s sentencing sends a clear message that IRS Criminal Investigation will pursue and hold accountable financial fraudsters who deceive and cheat people seeking to invest in our real estate and lending markets. Our Special Agents were proud to work with the FBI and the U.S. Attorney’s Office to bring Mr. Avergoon’s schemes to an end.”
Avergoon pleaded guilty in July 2020, admitting that from 2010 to 2015, he and Goldstein recruited at least nine taxpayers who made more than $275,000 in fraudulent “donations” to the Chabad. Avergoon acted as a conduit to secretly return 90 percent of the money to the purported “donors.” Avergoon also admitted that he joined Rabbi Goldstein in a grant fraud scam in which they obtained hundreds of thousands of dollars in misappropriated grant funds, and a government benefits fraud scheme.
As part of the government benefits fraud scheme, Avergoon used shell companies, including “Imagination Construction Company,” to create fictitious and backdated invoices for services like carpet installation, repairs to the Chabad of Poway’s HVAC system, and replacing damaged books and other supplies—even though Avergoon had never performed these services. In some cases, Avergoon would give Goldstein several fake bids from different shell companies, so that Rabbi Goldstein could trick the grant program administrators into believing he had complied with their competitive bidding requirements. Avergoon and Goldstein pretended that the government grant funds would be used for facilities upgrades, security systems, and community programs. But in reality, the money often went straight to Goldstein’s and Avergoon’s pockets; other times they used portions of it to pay contractors who had in fact charged much lower prices than reflected on Avergoon’s phony paperwork.
Apart from his fraudulent partnership with Rabbi Goldstein, Avergoon also admitted to participating in separate real estate Ponzi schemes from 2010 to 2016, in which he cheated retirement investors out of a total of $12 million. Avergoon was a San Diego-based real estate agent, and he used his industry knowledge and reputation to target trusting victims who would invest in what they thought was the purchase of rental property.
Avergoon promised monthly dividends that would be paid from rental income. He created written investment materials like prospectus and projected income and expenses calculations, designed to give investors the false impression that their money would be safely tucked away in passive-income retirement investments. But in truth, instead of using investors’ money to buy rental properties as he promised, Avergoon spent the money himself and just pretended that he had purchased the apartment buildings and office space he advertised. In true Ponzi fashion, for a time, Avergoon made the promised dividend payments—but rather than using rent income, he funded those payments using new investor money.
Avergoon deceived more than a dozen unwitting investors, convincing them to part with at least $5 million. When an investor would ask to cash out, he encouraged them to re-invest, and at one point he pretended to “roll over” their retirement investments to purchase a multi-million-dollar commercial building. In reality, he bought that building with a loan, not with investor money, and again diverted their money to his own personal use. He created fake partnership agreements, false purchase documents and deeds, and other fictitious records, and forged the signatures of his investors to conceal the fraud—then laundered the proceeds in order to disguise the true source and ownership of the money.
Avergoon did not stop there. He convinced investors to part with another $5 million or more by pretending to use their money to fund short-term, low-risk loans supposedly secured by the borrowers’ high-end San Diego homes. But in reality, there were no “borrowers”—Avergoon used his real estate connections to identify homes he could pose as collateral, and he simply doctored up fake loan agreements and forged the borrowers’ signatures. In some cases, the individuals he claimed were the borrowers did not even own the homes that were purportedly used as collateral. Avergoon made fake loan agreements, Deeds of Trust, mortgage Notes, and other official-looking documents, and he even created fake notary stamps and San Diego County Recorder’s Office markings to make the paperwork appear legitimate. Once again, Avergoon used new investor money to make occasional payments to his victims, to make it appear that the “loans” were performing. But in truth, he diverted the money to his own use and the “investments” were worthless.
Avergoon was indicted in August 2019 and apprehended in Latvia. He was extradited to the United States in November 2019 and has remained in custody since his extradition and initial appearance in federal court in San Diego.
DEFENDANT Case Number 19cr2955-BAS
Alexander Avergoon Age: 46 San Diego
Wire Fraud, in violation of Title 18, USC 1343
Maximum Penalty: Twenty years in prison
Aggravated Identity Theft, in violation of Title 18, USC 1028A
Maximum Penalty: Two years minimum consecutive term in prison
Money Laundering, in violation of Title 18, USC 1956(a)(1)(B)(i)
Maximum Penalty: Twenty years in prison
Federal Bureau of Investigation
Internal Revenue Service – Criminal Investigations