If you take $1.2 million in investor money, then spend less than $400,000 on the project and “refund” the rest to yourself, at some point you are likely to run into some complaints. That is just what happened to James C. Nistler yesterday, when he was convicted for racketeering, securities fraud and aggravated theft by a County Circuit Court jury in Medford, Oregon. Nistler collected money from “about a dozen elderly investors” for the project. He was not licensed, nor were the securities he was selling registered.
Nistler is a former “high ranking official” with the U.S. Department of Housing and Urban Development. He worked with HUD in the late 1980s. He proposed to use the funds to create a housing development called Tennessee Acres. Overall, about $800,000 were lost in the scheme. Nistler will be sentenced December 9.
It took the jury less than a day to convict Nistler of “an elaborate Ponzi scheme,” though his attorney claimed that the developer is simply “a victim of high hopes and poor timing”. The lawyer argued that the housing development was not an “evil Ponzi scheme,” but actually a failed real estate deal. He emphasized that Nistler lost his own money when the subdivision failed. However, Nistler advertised high rates of returns on short-term investments when he was soliciting money for the project, and then used the money to pay off “old, massive encumbrances on the properties.” The debts had been created by Nistler earlier in the development process when he paid himself “unwarranted fees and refunds.”
While it sounds like James Nistler erred in multiple ways and probably was not operating above board, does the fact that the failure of the development ultimately led to the lawsuit concern you?
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