Two OC residents arraigned in $11 million Ponzi scheme
News: 2014 Press Release
NEWPORT BEACH, Calif. -Two Orange County residents were arraigned in an $11 million Ponzi scheme victimizing 27 people with sale of unsecured securities based on fraudulent insurance policies. Joseph Francis Bartholomew, 75, Lake Forest, is 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. If convicted, Bartholomew faces a maximum sentence of 42 years in state prison. Bartholomew is being held on $11.3 million bail and must prove that the money comes from a legal and legitimate source before posting bond.
Co-defendant Wendy King-Jackson, 54, Laguna Niguel, is 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. If convicted, King-Jackson faces a maximum sentence of 16 years in state prison. Both defendants will be arraigned on Thursday, Dec. 4, 2014, at 8:30 a.m. in Department H-2, Harbor Justice Center, Newport Beach.
The defendants are accused of engaging in a "Ponzi scheme," which is a fraudulent operation that offers investors high, short-term returns on investments. Instead of using the money to generate actual income and legitimate profits, the money from the investors is kept for the benefit of the defendant or used to repay earlier investors.
Bartholomew is accused of owning and operating MBP Insurance Services, Inc. (MBP), which offered and sold unsecured securities based on fraudulent insurance policies. Between July 2005 and May 2014, Bartholomew is accused of defrauding 28 investors and falsely promising them that he would be able to provide a return of 15 to 40 percent in interest from their investment.
King-Jackson worked at MBP as an insurance agent. King-Jackson is accused of offering and selling unsecured securities based on fraudulent insurance policies by misleading clients that the policies were legitimate and legal investments when they were not. King-Jackson is accused of failing to disclose to clients that the California Department of Corporations (now "California Department of Business Oversight") did not authorize MBP to sell the securities, as required by law,and not informing clients of the risks associated with the investments as required by industry practice.
In September 2011, Bartholomew is accused of failing to pay monthly interest payments to investors, and by March 2013, all monthly payments to investors ceased.
In May 2014, Bartholomew is accused of offering to John Doe an unsecured investment claiming that he would pay him $10,000 monthly for a $500,000 investment. The defendant is accused of fraudulently assuring John Doe that he was making a legitimate investment on stranger-third party life insurance policies and that the defendant had no difficulties in paying back any of his other investors for the past 10 years.
Bartholomew is accused of collecting more than $11.3 million from investors.
A victim reported the crime to the California Department of Insurance, who investigated this case. Agents with the Federal Bureau of Investigation assisted with the investigation.
Deputy District Attorney Nagy Morcos of the Major Fraud Unit is prosecuting this case.
- OCDA Contact: Susan Kang Schroeder 714-347-8408 / Cell:714-292-2718
- Booking photos of Joseph Francis Bartholomew and Wendy King-Jackson are available to the public on the department's Flickr site: https://www.flickr.com/photos/ca_dept_insurance/sets/72157647284547203/
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $289 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $394 million in claims and premiums. Please visit the Department of Insurance web site at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP or 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.