Bond Scheme

Beverly Hills, CA: (Nov-24-07) The federal Securities and Exchange Commission brought charges against Robert Kasirer, a Beverly Hills attorney, accusing him of hatching a scheme to defraud investors of tens of millions of dollars. The suit charged Kasirer of operating a Ponzi-type scheme to enrich himself and his associates. A suit was also filed against another defendant, Jerold Goldstein, who was described along with Kasirer as a primary architect of the scheme. Federal officials stated that $144 million in tax-exempt bonds were sold for two facilities in Florida, one in Chicago, one in Rancho Cucamonga, CA, and six in Fort Worth, Austin, Brownsville, Houston, east Houston and Texas City. The facilities were to be developed by Heritage Housing Development, a Los Angeles nonprofit created in 1993 that was controlled by Kasirer. Further, bond buyers were led to believe that proceeds from each bond offering would be used to finance one specific healthcare facility.

SEC officials stated that from the onset, the costs of developing the healthcare facilities, including payments to defendant Kasirer and some of his family members, outstripped the proceeds from the facilities' respective bond offerings. The defendants covered the resulting cash shortfalls by operating a type of Ponzi scheme, commingling bond proceeds and diverting bond proceeds from more recent offerings to pay the expenses of earlier projects. As part of a settlement reached, a US district court in California issued a final judgment, ordering Kasirer to pay $5 million, resolving the fraud suit. [STAR TELEGRAM: INVESTMENT FRAUD]

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Published on Nov-26-07