Finally, Tier 3 investors would receive invitations to purchase additional homes in areas like California, Arizona and Florida. The real estate areas were Loomis’ idea, wherein Loomis would agree to pay the mortgages and taxes. The “hook,” for investors, is that they would receive a recurring income of at least $300 per month on each property. The problem is that he failed to inform the investors that the property appraisals were fraudulent.
A Family Affair Gone Askew
To help him carry out his scheme, Loomis recruited his own father-in-law and six other individuals. Five of the six co-conspirators also received prison sentences, and the sixth person died before the term started.
Loomis’ scheme is typical of any Ponzi scheme. He would take money from new investors to pay back the original investors. Additionally, he used investor money to pay business operating expenses and for his own personal gain. As with most Ponzi schemes, very little investor money is actually invested, and clients start to complain. Eventually, the scheme implodes and victim clients lose their life savings, retirement accounts and homes.
