Richard Ferguson Tipton of Palo Alto received an 18-month federal prison sentence Monday, Sept. 24, for his part in a real estate investment scheme that victimized 200 Bay Area investors.
Tipton, 62, could have received 20 years in federal prison, but prosecutors said he provided substantial assistance to federal investigators regarding the amount of money that was defrauded by four defendants in the case. The estimated unrecoverable loss is between $7 million and $20 million, according to court papers.
Tipton worked for Jim Ward & Associates, also known as JSW Financial, of Mountain View. He and co-defendants James Ward, 65, formerly of Atherton, Edward George Locker, 36, of Highland Heights, Ohio, and David Lin of Los Altos told investors their money would be used to make loans secured by residential real estate.
In reality, the men used most of the money to make unsecured and undocumented loans to entities that the defendants controlled. The investments they made in Silicon Valley real estate development projects were suffering mounting losses and protracted delays. They used investors' money to prop up the failing investments, according to court papers.
As the enterprise collapsed, investors continued receiving monthly statements showing steady growth in the value of their portfolios, according to the Securities and Exchange Commission, which filed a separate civil suit.
Federal prosecutors asked for a 21-month sentence. Ward was sentenced to five years in prison on Aug. 20.
Tipton became the manager of the two failing funds, Blue Chip and Shoreline, after the collapse in late 2008. He explained in his declaration to the court that he was responsible for the distribution of certain funds to Blue Chip investors in April 2012. He also helped determine what additional funds might be returned to both Blue Chip and Shoreline investors in the future, according to prosecutors.
The information he provided helped prosecutors in their sentencing of co-defendant David Lin, who had argued the losses were not as great as prosecutors claimed. That sum would figure into sentencing guidelines that could result in a greater or lesser sentence for Lin and the other defendants.
Tipton's assistance helped "establish that the government has accounted for whatever paltry returns fund investors have received, or likely will receive," prosecutors wrote.
Tipton and Ward were both Stanford University track standouts. Tipton's 14.14 time from 1969 in the 110-meter high hurdles still ranks among the school's all-time top-10 list. Ward ran the 400 meters.
Prior to sentencing, 79 people, including prominent Palo Alto business people involved in real estate and construction, wrote letters supporting a lenient sentence.
Tipton will be on three years of supervised release after his prison sentence, prosecutors said. Lin was sentenced to 28 months in federal prison; co-defendant Locker will be sentenced Oct. 15.
All four men will appear in court Oct. 29 for a victim-restitution hearing.