Two California men will each serve at least a decade in prison for operating a real estate Ponzi scheme that duped victims out of nearly $5 million. Terrance Brown, of San Jose, California, and Antranik Kabajouzian, of Morgan City, California, received a 15-year and 10-year sentence, respectively, from California Judge Shelyna Brown. The men had previously pleaded guilty to multiple felonies, including financial elder fraud, grand theft, securities fraud and forgery. Because the charges were brought by the State of California, the men will be eligible for parole after serving a minimum portion of their respective sentence.
Brown and Kabajouzian operated Bay Area Equity Group ("Bay Area Group"), telling potential investors that they could earn consistent 15% annual returns through the purchase and refurbishment of local rental houses. Brown knew many of the victims through his occupation as a tax preparer, and used that relationship to convince many of his clients to invest with Bay Area Group. The men also used a well-designed website and made local presentations to potential investors in soliciting investments. In total, at least 40 investors entrusted approximately $4.5 million to Bay Area Group.
However, the houses purchased with investor funds were not refurbished and filled with paying tenants, but rather were dilapidated and abandoned houses in Detroit that in some cases were condemned and torn down by the city. Authorities learned of the scheme after a former Bay Area Group employee came forward voicing their suspicions, and the pair were later arrested - with Brown being arrested at a Las Vegas casino where he was gambling. Victims suffered near total losses, with the 40 victims sharing in the $40,000 proceeds of an Aston Martin formerly owned by Kabajouizan and auctioned off.