Judge Orders Champion-Cain To Spend 15 Years In Jail For $ 400 Million Ponzi Scheme
Gina Champion-Cain, a top restaurateur who orchestrated a nearly $ 400 million Ponzi scheme involving hundreds of victims, was sentenced to 15 years in prison on Wednesday.
She received the maximum sentence for the criminal charges of conspiracy, securities fraud and obstruction of justice.
While federal prosecutors had recommended a lesser sentence for nearly 11 years, in part because of his cooperation in the pending case, US District Judge Larry Burns said Champion-Cain deserved the maximum, calling his crimes “huge fraud” and “treason “.
Not only was his Ponzi scheme long lasting, it was possibly the biggest fraud in the history of the Southern California District of the Federal Court, Burns said. He was not willing to give her all the credit for her cooperation as he felt this had already been taken into consideration as part of his initial plea deal last year. In truth, Burns said, Champion-Cain could have been indicted on many more counts – and face a much longer jail term – for a scheme that has so far resulted in net losses of over $ 180 million. of dollars.
“It lasted seven years. It wasn’t just strangers hoping to get rich, ”Burns said, referring to some of the victims who were longtime friends of Champion-Cain and who spoke to the judge on Wednesday in court. “I did not realize the personal relationship between the accused and many people who have been victimized. It is a level of deception and betrayal that I was not fully aware of.
In addition to time spent behind bars, Burns sentenced Champion-Cain to three years on probation. Depending on her behavior in prison and other factors, she could potentially earn more than three years in prison, Burns suggested.
After passing sentence, he refused Champion-Cain’s request to postpone the start of her prison term so that she could get her COVID-19 vaccine and boost her immunity to the virus. Champion-Cain, 57, showing little emotion during the hearing, was arrested and taken out of the courtroom with her hands behind her back.
Long regarded as a powerful businesswoman who in recent years was best known for her now-closed Patio restaurant chain, Champion-Cain devised a Ponzi scheme nearly a decade ago that the U.S. Attorney’s Office described it as a “steroid,” drawing attention to at least $ 372 million from more than 490 investors over a seven-year period.
In July, Champion-Cain pleaded guilty to criminal charges as part of a large liquor license loan scheme that attracted investors who thought they were giving high interest rate loans to license applicants who apparently could not afford the sum of money. money required while their claims were pending before the State Department of Liquor Control Beverage Control.
What investors didn’t know was that Champion-Cain funneled most of the funds to companies it controlled – American National Investments and its subsidiary ANI Development – and used new investors’ money to pay back. people who had invested earlier.
In some cases, the money she requested from investors was used to support her restaurant, clothing and vacation rental businesses, some of which were bankrupt or had negative cash flow. Millions more, the US attorney’s office said, have helped support his “luxury lifestyle,” including making payments for personal homes and buying seats, automobiles, jewelry, and vacations. San Diego Padres and Chargers.
After learning about the investigations into its loan program, Champion-Cain instructed its employees to destroy e-mails, refrain from producing calendar and e-mails, as well as junk files sought by the Securities and Exchange Commission, Deputy U.S. Prosecutors Aaron Arnzen and Andrew Galvin said. in a sentencing note.
“Almost 500 victims have paid more than $ 350 million into the Champion-Cain fictitious investment program,” Galvin said after the court hearing. “Champion-Cain did not use the money to fund liquor license transactions, as she told investors. Rather, it used tens of millions of dollars to line its pockets and to support its ailing Patio restaurants and other retail businesses.
Of the judge’s decision to impose a harsher sentence than recommended, Arnzen said: “In this case, the judge actually had more information than we did. We are convinced that this was a very important sentence.
During the hearing, Arnzen, in response to a question from Burns, said he expects more prosecutions following the ongoing investigation into the Ponzi scheme. Last week, former Champion-Cain chief financial officer Crispin Torres, who pleaded guilty last year to a single conspiracy charge, was sentenced to four years in prison.
Before hearing what her sentence would be, Champion-Cain spoke to Judge Burns, saying she understood the gravity of her crimes and the “horrible impact” they had on her victims, as well as on her. own family and friends. She said she wondered what would have caused her to “behave so horribly”.
In part, she said, she believes her fraudulent behavior has its roots in the fallout from the recession in 2008, when it reached a “point of desperation.”
“I have worked hard to generate wealth for my family, friends and myself as we all struggled to get out of this dark economic hole,” Champion-Cain said, voice shaking at one point during his remarks. “I kept trying to make deals, to be creative in recreating my business, but I kept failing. I panicked and felt I needed to support an image of who people believed Gina Champion-Cain to be.
Champion-Cain’s victims, the US attorney’s office said, spanned a wide range – from wealthy investors who lost tens of millions of dollars to a former district attorney “who had a much smaller nest egg than he did. couldn’t afford to lose ”.
A few of them made statements to Burns in which they attempted to convey the level of betrayal they felt, especially given their long-standing personal relationship with Champion-Cain.
Jane Gilbert, a criminal defense attorney who described herself as a 30-year-old former roommate and friend who attended Champion-Cain’s wedding, said she still didn’t believe how her friend could’ve gotten her. to trick. Gilbert said she was torn between wanting to punch her in the face and giving her a hug.
“The hardest part is not the loss of money but the betrayal that I feel,” she said. “I am so saddened. I am so hurt by this. I thought I knew her and now I don’t know her anymore, and I don’t know if what she is saying today is true.
Calling Champion-Cain a “wicked” and a “very bad person,” Kristine Heidrich urged Burns to sentence her to the maximum extent possible under the law. Heidrich, who at one point owned a bioidentical hormone therapy company, said she viewed Champion-Cain as a “business companion.”
“By the time she met me, she knew she would take my money and she had a plan,” said Heidrich, who dabbed his eyes with a handkerchief after he finished speaking. “It doesn’t mean anything to me that she says she’s trying to be cooperative.”
After the hearing, she said she was happy with Burns’ decision. While the sentence was gratifying, it was also painful, Heidrich said. “It is a human being who hurts other human beings. How can you have joy in this? I do not know.”
Champion-Cain has the option to appeal his sentence within the next 14 days. His lawyer, David Scheper, said no decision has yet been made.
Federal judges have wide discretion in sentencing. They don’t always follow prosecutors’ sentencing recommendations and often end up sentencing people to less jail time than the government has asked for. It is unusual, though not unprecedented, for a judge to disagree and increase the sentence recommended by prosecutors.
“Here in San Diego, judges quite frequently convict below the government’s recommendation,” said Jeremy Warren, a criminal defense attorney not associated with the Champion-Cain case. “Occasionally, in extreme cases, a judge may impose a sentence greater than the government’s recommendation. “
Burns, a former federal prosecutor in San Diego, made it clear at the hearing that the US attorney’s office recommendation of 130 months in prison was too lenient. He noted that once the scam was discovered and investigators had access to files detailing the scams, it was likely that prosecutors could have proven their case – without Champion-Cain’s help.
Arnzen replied that his cooperation after the opening of the scam had saved time and money for the receiver tasked with unraveling his financial affairs and recovering money for investors.
As Wednesday’s conviction finally answers the question of just how much Champion-Cain will be punished for his crimes, the investigation into the Global Liquor License Loan Program continues as investigators seek to see if there are other accomplices.
In an attempt to recoup a percentage of their losses, several investor groups have filed lawsuits against Chicago Title, claiming the company played a role in facilitating the fraudulent loan program. Chicago Title was the escrow company Champion-Cain used to hold the investor money it had collected for the so-called loans. So far, Chicago Title has made deals with nearly 200 investors for more than $ 60 million, which is only part of their losses.
Champion-Cain said his main goal is to help recover funds for his victims.
Burns, however, said he believed many victims were unlikely to see much of their money, if any, returned, as much of it had already been spent on lavish personal items – a golf cart. $ 20,000 golf course, jewelry, seating at sporting events.
“A lot of it,” Burns said of the money, as several victims in the gallery nodded softly in agreement, “is gone.”