A California man dubbed as the "Bernie Madoff of Orange County" by the California Department of Insurance, along with his female co-worker, have been arrested and charged with dozens of felonies for what authorities allege was a $11 million Ponzi scheme. Joseph Francis Bartholomew, 75, was charged with one felony count of the use of a device or scheme to defraud and 28 felony counts of using an untrue statement in the purchase or sale of a security with sentencing enhancements for aggravated white collar crime over $500,000 and loss greater than $3.2 million. Wendy King-Jackson, 54, was charged with one felony count of the use of a device or scheme to defraud and two felony counts of the use of an untrue statement or omission in connection with the purchase or sale of a security with sentencing enhancements for aggravated white collar crime over $500,000 and loss greater than $3.2 million. The California Department of Insurance has characterized the alleged scheme as one of the largest Ponzi schemes they have ever investigated. The two were arraigned on the charges earlier today.
Bartholomew owned and operated MBP Insurance Services ("MBP"), where Jackson worked as an insurance agent. Beginning in July 2005, MBP pitched potential investors on the ability to purchase products based on fraudulent insurance policies that offered above-average rates of return that often ranged from 15% to 40%. Investors were led to believe that the investments were legal and legitimate, and were not informed that MBP had not been authorized by the California Department of Corporations. In total, at least 27 investors entrusted over $11 million to MBP and Bartholomew, including a former Major League Baseball player.
However, Bartholomew is accused of running a Ponzi scheme by using incoming investor funds to pay promised returns to existing investors. Beginning in September 2011, certain investors failed to receive their promised regular interest payments from MBP and, by September 2013, MBP was no longer making any monthly investor payments.
Bartholomew, who faces up to 42 years in prison if convicted of all charges, is currently being held on $11.3 million bail. In order to be released on bond, Bartholomew must demonstrate that the posted bond must not be traceable to criminal activity.King-Jackson faces a maximum 16-year sentence.