Updated 

Man pleads guilty to $5 million Arizona real estate fraud scheme


A Southern California man pleaded guilty Tuesday in a $5 million investment fraud scheme involving real estate projects in Lake Havasu City, Ariz., and Kingman, Ariz.

Michael John Bowen, 61, entered guilty pleas in federal court in Santa Ana, Calif., to one count of tax fraud and one count of mail fraud, the Internal Revenue Service announced.

He faces a maximum of 23 years in prison at his Feb. 21 sentencing.

Between 2003 and 2009, Bowen used his development companies to solicit more than $28 million in securities, membership interests and stocks from investors in the Arizona development projects, according to his plea agreement.

Bowen admitted pocketing roughly $5 million.

Throughout Orange County, Bowen acknowledged hiring unregistered sales agents to make cold calls to prospective investors to offer and sell securities, often providing sales agents with lead lists and scripts to facilitate their work. Bowen directed the unregistered sales agents to make material misrepresentations and omissions, such as a guaranteed eight percent annual return, inflating the value of assets and telling investors about an imminent public offering.

According to the plea agreement, Bowen used the investor funds to pay for his own personal expenses. That included spending more than $800,000 on the construction of a home in Lake Havasu, $1 million on the purchase of shares in Air Kauai and $170,000 on luxury automobiles and motorcycles.

As part of the plea agreement, Bowen admitted he also filed a false 2005 tax return, failing to report $2.5 million in income.

The case was investigated by special agents with IRS Criminal Investigation and the FBI.

Contact reporter Jeff German at jgerman@reviewjournal.com or 702-380-8135. Follow him on Twitter @JGermanRJ.

 

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