More Arrested in Fountain Valley Area Fraud Case

FOUNTAIN VALLEY, CA — Authorities today sought additional possible victims of an alleged real estate fraud scheme that resulted in nearly $3.5 million in losses for more than 50 Southern California investors.

Shawn Patrick Watkins, 46, of Layton, Utah was arrested after surrendering to FBI agents in Orange County on Sept. 1 and pleaded not guilty that day, according to the U.S. Attorney's Office.

"Watkins had been charged with mail fraud, wire fraud and money laundering in a nine-count indictment returned on August 17 by a federal grand jury," according to Thom Mrozek, public affairs officer with the U.S. Attorney's Office.

Between approximately 2007 and 2014, Watkins and others lured victims to invest in a company called The Equity Growth Group, Mrozek said.

At seminars conducted in Orange County hotels by Investor Workshops, Inc., Watkins told potential investors he was a former law enforcement officer and "presented himself as an expert in the field of real estate investment," Mrozek said.

Investors were allegedly told The Equity Growth Group's portfolio included control of hundreds of rental income-generating properties and that more would be acquired.

"Watkins led investors to believe that they would receive substantial interest payments or that their money would be secured by collateral through the filing of deeds of trust on properties," Mrozek said.

The scheme collapsed in the spring of 2014, he said.

"Investor money was not used to acquire new properties, nor was it secured by collateral, and many victims did not receive interest payments," Mrozek said.

"In fact, money that was paid to some victims as purported interest or a return on their investment came from investments made by other victims."

The indictment alleges that bilked investors lost about $3.4 million.

"This defendant took great pains to lend legitimacy to his scheme, such as holding elaborate seminars and presenting himself as an expert investor," U.S. Attorney Eileen M. Decker said.

"But, as we see all too often, the false claims were designed to support a Ponzi scheme that took money from unsuspecting victims for a number of years. We are committed to seeking justice in these cases and doing whatever we can to recover money lost by victims to such schemes."

If convicted on all charges -- four counts of mail fraud, two counts of wire fraud and two counts of money laundering -- Watkins would face a maximum penalty of 180 years in federal prison.

Watkins pleaded not guilty at his arraignment in Santa Ana on the day of his arrest and is free on $35,000 bond. A trial date of Oct. 25 was ordered by District Court Judge Cormac J. Carney.

"Mr. Watkins greatly overstated his relationship with law enforcement as a way to gain the trust of investors, only to get the attention of law enforcement by stealing their money," said Deirdre Fike, the assistant director in charge of the FBI's Los Angeles Field Office.

Investigators believe others in California and in Utah or elsewhere may have been victimized in the scheme.
"Anyone who believes they may have been targeted by the defendant is urged to contact the FBI," Fike said.
The FBI's Los Angeles Field Office can be reached at (310) 477-6565.