AREI- TIC sponsor, brokers charged and arrested

California Attorney General Jerry Brown announced that three individuals have been arrested and charged with orchestrating a massive Ponzi scheme called AREI that swindled $200 million from thousands of investors.   Many of the projects were structured as tenant in common (TIC) investments.  James Koenig, one of those arrested and charged, was the principal operator of AREI.  In 1986, Koenig had been convicted of two counts of mail fraud in federal court.  He was sentenced to two years, six months in prison and ordered to make complete restitution in an amount not to exceed $5,000,000.  That fact was not disclosed to investors, although Koenig has stated that everybody “knew” about it. The other two individuals charged were Gary Armitage and Jeff Guidi, registered principals of ePlanning Securities, Inc., the broker dealer that raised most of the funds.  Armitage and Guidi are also shareholders and directors of the parent company of ePlanning.  Koenig, was a shareholder of the parent company of ePlanning, as well.   The complaint also alleges that several of AREI’s earlier projects were failures, failures that were not properly disclosed to later investors.  Koenig has stated that it was the Board of Directors of ePlanning,  ePlanning attorneys, and AREI’s attorneys that made the decisions regarding what should be disclosed in the offering memorandums.  The indictment that has been filed carries multiple counts which could keep these individuals, if convicted, in prison for the rest of their lives.