John Harder, former CEO of an Oregon-based chain of retirement centers, pleaded guilty yesterday to charges pertaining to a complicated scheme that officials claim defrauded investors out of $130 million. Prosecutors will ask for a fifteen year prison term at his sentencing; Harder’s attorneys will ask for five years.
Assistance U.S. Attorney Allan Garten stated that Harder ran a “classic fraud scheme,” soliciting money from investors and banks while his Sunwest Management chain of over 300 assisted-living centers collapsed.
Harder pleaded guilty to mail fraud and engaging in monetary transactions in property derived from unlawful activity. Other charges were dropped when Harder reached a plea agreement. Garten stated that Harder misrepresented to investors that Sunwest was successful when, by early 2006, it was bleeding cash “hand over fist.”
In an attempt to conceal the losses, Harder bought more than one hundred assisted-living centers at an average of one per week. Harder allegedly commingled investor funds in Sunwest-controlled companies and misrepresented to investors about its financial strength and practices.
Garten stated Harder lived an extravagant lifestyle while defrauding over a thousand investors in the scheme. A number of investors packed the standing room-only courtroom, but all declined U.S. District Judge Michael Simon’s offer to speak.
After Garten made his case for the government, defense attorney Chris Schatz told the judge, “Basically, we don’t agree with anything Mr. Garten just said.”
In another case, the SEC filed suit in 2009 alleging Harder of committing securities fraud. The SEC sought up to $190 million in civil penalties, but a judge struck down the attempt.
If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.