While authorities are searching for a Pittsburgh-area man they say defrauded investors in his real estate company, the man's former business partner has pleaded guilty to giving him money in violation of federal banking laws. The man said he transferred a total of $108,000 to his accused partner, who left the Pittsburgh area in 2008 and has not been seen since. A 2010 indictment accuses the man of fraud related to how he and his partners represented his company to investors.
The missing man, formerly of Murrysville, Pennsylvania, was the owner of a real estate investment company called East Haven Investments in Monroeville. Together with the man who made the money transfers and another partner, he purchased homes and Allegheny and Westmoreland counties, renovated and resold them.
The two men and one woman used money from outside investors to make their operation work. Authorities claim they promised potential investors returns of eight to 14 percent and that their investments would be secured by a mortgage on the property.
But East Haven was not as successful as the three said, prosecutors allege. Investment properties had multiple mortgages on them, complicating investors' claims on the land. More seriously, the three are accused of inflating the value of the properties in the mortgages and of selling property to straw buyers to make the business appear more successful than it was.
The man who pleaded guilty in federal court in Pittsburgh on Feb. 22 admitted to making a series of bank transfers of between $7,100 and $9,500 into the missing man's accounts in early 2008. Federal regulations require banks to report transfers of $10,000 or above to the Treasury Department so it can investigate potential white collar crimes. Authorities charged the man with deliberately keeping individual transfers under $10,000 to avoid suspicion.
The other male partner was last heard from in March 2008.
Source: Pittsburgh Tribune-Review, "Trafford man pleads guilty to giving money to fugitive," Richard Gazarik, Feb. 23, 2012