An Arizona man entered a guilty plea to charges that he orchestrated a house-flipping Ponzi scheme that defrauded investors out of nearly $2 million. Jere Parkhurst (f/k/a Jere Sessions) pled guilty to a single count of wire fraud in a criminal proceeding that was originally spawned from a series of civil lawsuits brought against Parkhurst by disgruntled investors. After criminal authorities caught wind of the scheme, Parkhurst was indicted in 2011 on seventeen counts of wire fraud and ten counts of money laundering. Both wire fraud and money laundering each carry a maximum potential sentence of twenty years in prison along with a criminal monetary fine.
Parkhurst owned and operated several companies that included C Street Holdings, LLC; Capital Real Estate Co. LLC; and Phoenix Financial Holdings (the "Companies"). Beginning in late 2006, Parkhurst began soliciting potential investors for what he described as the remodeling and resale of historic homes in the Phoenix area. Investors were promised annual returns that ranged up to 25%, which in turn attracted other investors as original investors began spreading word about their success.
However, according to authorities, Parkhurst misrepresented the use of investor funds, and instead operated the classic Ponzi scheme by using incoming investor funds to make interest and principal payments to existing investors. Additionally, when Parkhurst actually did use investor funds to purchase real estate, he failed to keep current on mortgage, utility, and insurance payments. When the real estate market began to head south, Parkhurst fell further behind in scheduled interest payments, which resulted in the filing of several civil lawsuits by burned investors. Federal authorities began investigating Parkhurst and the Companies soon thereafter.
In a troubling lesson of how valuable it can be for an investor to conduct due diligence before entering into any investment venture, one newspaper reported that several civil judgments had been entered against Parkhurst and his wife beginning in 2004 - several years before the scheme was hatched. Such judicial records are easily retrievable by conducting an online records search.
Parkhurst is scheduled to be sentenced April 15, 2013.