California Man Extradited To Face Charges For Alleged $13.5 Million Ponzi Scheme

A California man has been extradited from Texas to face charges that he masterminded a Ponzi scheme that duped investors, including his grandfather, of nearly $14 million.  Brandon Walter Stewart, 30, had been contesting extradition after he was arrested in Texas last October.  After a Texas appellate court ruled that extradition was proper, Stewart was returned to Orange County, California late last week.  Stewart faces nearly 200 felony charges, including 24 counts of using untrue statements in the purchase or sale of a security, 126 counts of money laundering, 38 counts of writing bad checks, four counts of failure to file a California state tax return, three counts of residential burglary, and two counts of financial elder abuse.  If convicted of all charges, Stewart could be sentenced to over 100 years in prison and face substantial fines.

According to authorities, Stewart began soliciting investors in April 2009, including his grandfather, with the promise that they could receive substantial short-term returns from an investment fund operated by Stewart that purportedly had more than $100 million invested in equities such as Facebook and foreign investments.  However, instead of using investor funds for their promised purpose, Stewart is accused of living a lavish lifestyle that included gambling trips to Las Vegas on a private jet.  Authorities allege that Stewart used investor funds to pay alleged returns to investors - a hallmark of a Ponzi scheme.

Beginning in 2012, Stewart also allegedly wrote millions of dollars in bad checks from bank accounts that were either closed or that had insufficient funds.  This led to losses to nearly $3 million to financial institutions.  Stewart was arrested in Texas in October 2014, and had vigorously fought extradition back to California to face the charges.

The case is yet another where a California defendant faces residential burglary charges in connection with an alleged Ponzi scheme.  Prosecutors have recently levied burglary charges against accused Ponzi schemes due to the California Penal Code's definition of burglary as the entry into a structure with the intent to commit a felony - in this case, theft. While novel, the theory has been used several times in recent memory against California defendants.  For example, a California man faced burglary charges in March 2014 for operating an alleged ATM Ponzi scheme, while another California man faced 37 counts of residential burglary in 2009 in connection with what prosecutors alleged was a $200 million Ponzi scheme. The choice by California authorities to levy burglary charges in white collar crimes may also be partially due to its categorization as a serious "strike" crime under California's Three Strikes Law, which may allow for a stricter sentence.