An Austin, Texas, man was sentenced to five years and eight months in prison May 18 and ordered to pay $5,052,366.92 in restitution for his role in a fraud scheme.
Michael Schubert, 47, from 2012 to June 2018, created a scheme to defraud hotel investors out of millions, according to a Department of Justice press release. Schubert determined potential investors through seminars he conducted where he explained how to make money investing in hotel properties, known as ‘Rich in Five’ seminars, and charged people who wanted to participate substantial fees to attend.
Schubert then asked participants for money to invest in existing hotel properties that he would later manage and operate while claiming that the investors would make a large profit with little effort, the release stated.
“This defendant engaged in a complex fraud involving commercial real estate, moving funds among numerous bank accounts, and making many false promises to well-intentioned investors,” U.S. Attorney, Ashley Hoff said. “Like so many other fraud schemes, this scheme was designed to line the defendant’s own pockets with other people’s hard-earned money. Now that his scheme has been dismantled, we are confident that the prosecution and sentencing of this defendant will bring a measure of justice to his victims.”
Schubert had no hotel management experience yet claimed that investor funds would be used to renovate the hotels, the release stated. Many of the hotels were old and in disrepair.
Schubert misappropriated the money by paying himself in large “management fee,” according to the DOJ. His scheme depleted investor funds resulting in the foreclose of the hotel properties with a loss greater than $5 million to investors.
Schubert pleaded guilty to one count of wire fraud and one count of engaging in a monetary transaction involving criminally derived property on Dec. 2, 2020, the release stated.
