Guilty Plea in "Battle of the Bands" Ponzi Scheme

A Southern California woman recently pled guilty to charges she bilked investors out of nearly $1 million in a classic Ponzi scheme.  Lauren Baumann, 43, pled guilty to a charge of wire fraud.  She faces a maximum prison sentence of twenty years, but which will likely be lower due to federal sentencing guidelines.  

According to authorities, Baumann solicited investors for Stewardship Estates LLC, a business she ran that sought to finance "battle of the band" events featuring Christian rock bands.  Some investors were also told that Baumann would use their funds to flip real estate.  Investors were promised guaranteed interest payments, and in total, more than two dozen victims invested nearly $1 million with Baumann.  However, instead of using investor funds for the stated purposes, Baumann used new investor funds to pay returns to existing investors, a hallmark of a Ponzi scheme.  Authorities also accused her of failing to disclose her previous conviction for securities fraud.

This is not Ms. Baumann's first Ponzi scheme.  She was previously convicted of securities fraud in Texas in 1999, when she was charged with fraudulently raising at least $5 million in connection with low-risk mortgage investments.  She served three years in prison for that scheme.  

Baumann is scheduled to be sentenced December 12, 2011.

A copy of the 1998 SEC Press Release is here.