Mission Viejo Man Sentenced In Elaborate Ponzi-Style-Scheme

A Mission Viejo man was sentenced Monday to 6 1/2 years in federal prison for stealing more than $2.3 million in a real estate investment scheme in which he used investors' funds to pay for travel, cosmetic surgery and to make Ponzi-style payments to victims.

Francisco "Frank" Hobson, 40, was also ordered by U.S. District Judge Percy Anderson to pay about $1.6 million in restitution and serve three years under supervised release following his prison term.

The former real estate agent pleaded guilty in October to wire fraud, admitting that between December 2010 and last June he lured victims with promises that their investments would be used to purchase properties.
In reality, the properties that Hobson advertised were not actually for sale or simply did not exist, and he sent victims purported purchase agreements for the properties which were fraudulent or forged, according to federal prosecutors.

He continued to engage in the scheme for months after being interviewed in November 2015 by the FBI in connection with complaints from two of his victims.

"The defendant made simple promises to his victims, promises he never intended to fulfill," Eileen M. Decker, the U.S. attorney in Los Angeles, said after a previous hearing.

"The defendant then used his victims' hard-earned money to fund his personal lifestyle," she said. "That he continued to do so after law enforcement had interviewed him was all the more egregious."

As detailed in his plea agreement, Hobson would tell investors to transfer money to "escrow accounts," which were, in reality, bank accounts that he alone controlled.

After the investors' money was deposited in his accounts, Hobson used the funds for personal purchases at grocery stores, chain restaurants, and retail stores, as well as making cash withdrawals.

He also used their money to pay his landlord, and for travel, laser hair removal and plastic surgery. Hobson also paid about $757,000 of the $2.3 million he collected in the scheme to his victims as Ponzi-style payments designed to conceal and extend the length of the fraud.

"The defendant targeted Hispanic individuals and presented himself as someone they could trust in a classic affinity scheme, only to spend their money to live lavishly," said Deirdre Fike, the assistant director in charge of the FBI's Los Angeles field office.

"Mr. Hobson's chronic criminal behavior even after an investigation was underway is a reminder that caution should be exercised before handing over large sums of money, even when someone appears to be in a position of trust, or when someone with a similar background is offering an investment opportunity," she said.

City News Service, Shutterstock