Thu. Dec 7th, 2023

LOS ANGELES – A Costa Mesa man pleaded guilty today to federal criminal charges for running fraudulent investment schemes that raised more than $17 million by promising investors – several of them elderly – returns of up to 10% that would be generated through real estate deals that turned out to be bogus, and for disobeying a court order to go to jail for violating the terms of his pretrial release.

Brett Barber, 44, a former co-owner of the Newport Beach-based BNZ Capital One LLC and National American Capital, pleaded guilty to two counts of wire fraud and one count of criminal contempt.

According to his plea agreement, from May 2019 to October 2021, Barber participated in two schemes to defraud victim investors out of their money and property.

In the first scheme, BNZ Capital, its principals and several marketers raised money by falsely representing that the firm bought and sold real estate projects and “flipped” real estate. Barber, co-conspirator Louis Zimmerle, 64, of Sacramento, and the marketers falsely promised investors a “guaranteed” return of between 8% and 10%, as well as potential bonuses based on successful deals. According to court documents, Barber told investors that their funds were “safe” and “FDIC insured.”

In fact, while BNZ Capital did purchase some real estate, it did not take any substantial steps to develop parcels, nor did BNZ flip real estate for a profit. Rather, BNZ primarily used investor funds to pay Barber, Zimmerle and others associated with the scheme, including purchasing residences where Barber and Zimmerle lived. Some of the investors’ money was used to repay earlier investors.

During this scheme, Barber, Zimmerle, and the marketers solicited or caused to be transferred to BNZ Capital approximately $13.8 million from victim investors. Investigators estimate that actual losses resulting from this scheme are at least $7 million.

Barber admitted in his plea agreement that he received and kept approximately $2,933,970 of investor money for his personal gain. At least five BNZ Capital investors were elderly, vulnerable victims who suffered substantial hardship because of the fraud committed against them.

After Barber learned that federal officials were investigating BNZ Capital, he began a second fraudulent scheme, this time involving a company he formed in January 2021 called National American Capital (NAC). The NAC scheme operated, in substance, the same way as the BNZ Capital fraud. That is, Barber and marketers working at his direction lied to investors by saying their money would be used to fund real estate development projects. In fact, there were no such projects, and the only way NAC could repay earlier investors was by soliciting money from new investors.

Specifically, in October 2021, Barber met with a person he believed was a prospective investor, but who in fact was an undercover law enforcement official. During this meeting, Barber told several lies: that NAC had been in business for 20 years, that it owned 10 parcels of land in Laguna Beach, and that it had purchased property in Newport Beach and turned in into a four-plex. None of these statements was true.

Barber admitted in his plea agreement that this scheme caused a loss of at least $3.5 million. He further admitted to receiving and keeping at least $388,669 of investor money for his personal gain.

During the BNZ Capital and NAC schemes, Barber failed to disclose to investors that he previously was barred from acting as or associating with a broker-dealer by the Financial Industry Regulatory Authority (FINRA).

Finally, after a federal grand jury indicted Barber in October 2021, he was released on bond. In January 2023, a court found that Barber violated the terms of his pretrial release and ordered him to surrender to the United States Marshals Service by January 13. Barber willfully disobeyed the court’s order and failed to surrender. In March 2023, Barber was arrested in Santa Cruz County, California. He eventually was transferred to federal custody in Los Angeles, where he remains.

United States District Judge Otis D. Wright II scheduled a March 4, 2024 sentencing hearing, at which time Barber will face a statutory maximum sentence of 20 years in federal prison for each wire fraud count, and a statutory maximum sentence of life imprisonment for the criminal contempt count.

Zimmerle pleaded guilty in January 2022 to one count of wire fraud. In his plea agreement, Zimmerle admitted to participating in the BNZ Capital scam and that he received and kept approximately $582,815 of victim investor money. His sentencing hearing is scheduled for January 22, 2024.

In October 2021, the United States Securities and Exchange Commission (SEC) filed a civil lawsuit against Barber, Zimmerle and BNZ Capital for fraudulently raising more than $13 million from over 100 retail investors.

The FBI is investigating this matter. The SEC provided substantial assistance.

Assistant United States Attorney Bradley E. Marrett of the Santa Ana Branch Office is prosecuting this case.

By Editor

The New Santa Ana blog has been covering news, events and politics in Santa Ana since 2009.

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