SANTA ANA, California - A Costa Mesa man has been arrested on federal fraud and money laundering charges alleging he helped run a fraudulent investment scheme that raised $13.8 million by promising investors returns of up to 10 percent that would be generated through real estate deals.
Brett Barber, 42, who was a co-owner of the Newport Beach-based BNZ Capital One, LLC, was arrested Thursday morning by special agents with the FBI. Barber, who is charged in a six-count indictment returned Wednesday by a federal grand jury, entered not guilty pleas Thursday afternoon during an arraignment in United States District Court.
Another owner of BNZ Capital - Louis Zimmerle, 62, of Sacramento - was charged Thursday with one count of wire fraud. In a plea agreement also filed Thursday in United States District Court, Zimmerle agreed to plead guilty to the felony offense.
Also on Thursday, the United States Securities and Exchange Commission filed a parallel civil lawsuit naming Barber, Zimmerle and BNZ Capital.
According to court documents, since the spring of 2019, BNZ Capital, its principals and several marketers raised money by falsely representing that the firm bought and sold real estate projects and “flipped" real estate. Barber, Zimmerle and the marketers falsely promised investors a “guaranteed" return of between 8 percent and 10 percent, as well as potential bonuses based on successful deals. According to the indictment, Barber told investors that their funds were “safe" and “FDIC insured."
In fact, while BNZ Capital did purchase some real estate, it did not take any substantial steps to develop parcels, nor did BNZ flip real estate for a profit, according to court documents. Rather, BNZ primarily used investor funds to pay Barber, Zimmerle and others associated with the scheme, including purchasing residences where Barber and Zimmerle lived. Some of the investors’ money was used to repay earlier investors.
Additionally, the indictment alleges that Barber failed to disclose to investors that he previously was barred from acting as or associating with a broker-dealer by the Financial Industry Regulatory Authority (FINRA).
During the scheme, Barber, Zimmerle, and the marketers solicited or caused to be transferred to BNZ Capital approximately $13.8 million from victim investors. Because several million dollars were paid to earlier investors, investigators estimate that actual losses resulting from this alleged scheme are more than $9 million. In his plea agreement, Zimmerle admits that he received and kept approximately $582,815 of investor money.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
Barber is charged with four counts of wire fraud and two counts of money laundering. The wire fraud charges carry a statutory maximum sentence of 20 years in federal prison, and the money laundering offense carry a statutory maximum sentence of 10 years in prison.
During his arraignment Thursday, a United States Magistrate Judge set bond at $800,000, and Barber is expected to be release later today. A trial in this case was scheduled for December 21.
The FBI is investigating this matter. The SEC provided substantial assistance.
Assistant United States Attorney Bradley E. Marrett of the Santa Ana Branch Office is prosecuting this case.
Source: U.S. Department of Justice, Office of the United States Attorneys
