A California man has been arrested and charged with operating a Ponzi scheme that duped victims, mostly elderly, out of at least $20 million. Aldo Joseph Baccala, 71, of Petaluma, California, was arrested Tuesday and charged with 131 counts of untrue statements/omissions in the sale of a security, 24 counts of grand theft, 8 counts of elder financial abuse, and 1 count of securities fraud. He was also charged with several sentencing enhancements relating to the amount of money allegedly stolen. The arrest is the culmination of a three-year investigation, which began after a group of investors brought a civil lawsuit against Baccala after the scheme allegedly unraveled in late 2008. If convicted of all charges, Baccala faces hundreds of years in prison.
According to authorities, Baccala owned and operated Baccala Realty, Inc. From 2003 to 2008, Baccala solicited potential investors, many of whom were elderly and family friends of Baccala, by promising annual returns exceeding twelve percent in return for investment in one of Baccala's ventures that included assisted living facilities, a car wash, and other businesses. Potential investors were assured that each project was secured by a first or second deed of trust on the property. However, in reality, no deed of trust was ever recorded. Instead, Baccala used the more than $20 million raised to make speculative bets in the stock market, which yielded losses of at least $8 million from 2003 to 2008. Additionally, investor funds were used to make purported interest payments to existing investors. As Baccala's losses grew, he continued to solicit new investors, offering increased rates of return of up to 27.5%.
In November 2008, after investors were told that Baccala would no longer be making monthly payments, a group of investors sued Baccala. According to news reports, that lawsuit settled, with Baccala promising to make payments of $22 million to the plaintiffs "when the real estate market rebounds."
A copy of the criminal complaint is here.