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Uploaded: Tuesday, September 25, 2012, 9:48 AM
Palo Alto man gets 18 months for real estate fraud
Richard Tipton receives prison sentence for real estate investment scheme
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by Sue Dremann
Palo Alto Weekly Staff
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.Are you receiving Express, our free daily e-mail edition? See a sample and sign-up for Express.
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Posted by mug shots?, a resident of the College Terrace neighborhood, on Sep 25, 2012 at 10:08 am How about some mug shots of the criminals?
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Posted by Enough!, a resident of the Charleston Gardens neighborhood, on Sep 25, 2012 at 10:40 am Really sad how people who are doing well can't be happy with that and feel they have to have it all.
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Posted by Not sad, a resident of the Old Palo Alto neighborhood, on Sep 25, 2012 at 10:56 am This group has been ripping people off for years. Predatory lending practices, foreclosing on hard working builders, screwing everybody they could while maintaining the guise of being "good business men", the public humiliation should have been better publicized.
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Posted by Aquamarine, a resident of Stanford, on Sep 25, 2012 at 11:05 am Who are these "prominent people" who wanted a lenient sentence for this jerk?
Not sad - can you tell us more about their predatory lending practices?
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Posted by Silly, a resident of the Embarcadero Oaks/Leland neighborhood, on Sep 25, 2012 at 11:09 am What a relief he only got 18 months. Good thing he didn't rob $10 worth of stuff from the 7/11.
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Posted by Gethin, a resident of the Midtown neighborhood, on Sep 25, 2012 at 11:52 am 18 months seems a ridiculously short sentence for this crime particularly as 20 years was possible. Of course he helped, he is basically getting no more than a tiny slap on the wrist and perhaps will not even serve 18 months.
I wonder how many of the 79 prominent people who are so forgiving, he and his friends stole money from, and what does the term "prominent" mean? I wonder what the opinion is of the people who were stolen from is on a suitable sentence.
18 months for the theft/loss of $7M to $20M; not exactly a huge deterrent.
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Posted by Cid Young, a resident of another community, on Sep 25, 2012 at 12:09 pm Another Shell Game, Ponzi Scheme or Investor Fraud. I wonder if the victims were prominent people, like the victims of Bernie Maddoff who made-off with their money? Some of his victims were "prominent" members of his own Jewish Communityi
If people would only do a bit of homework, or be skeptical, then people like these folks could not have been successful at ripping investors off.
IF IT SEEMS TOO GOOD TO BE TRUE,....IT IS!
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Posted by Keeping 100, a resident of East Palo Alto, on Sep 25, 2012 at 1:50 pm It's called Greed! And this is just the beginning. It's sad that it's never enough the one's who are well off are trying to harbor more. The other sad thing is that after getting all that you can, it still will leave you where you started. cause then you die and you can't take a thing with you....Just something to think about.
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Posted by ME, a resident of the Esther Clark Park neighborhood, on Sep 25, 2012 at 9:53 pm I wonder why these writers feel qualified to make such incriminating judgments? It is obvious that they don't know all the facts any more than I do. I suspect they enjoy seeing their name in print. Be careful how you judge another.
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Posted by Chris, a resident of the Palo Alto Hills neighborhood, on Sep 25, 2012 at 11:00 pm From what I understand these investors who invested in real estate projects in "late 2008" and were receiving a 10% annual return. If you invested in California real estate (as I have myself) in 2008 you're lucky if you held onto 2/3 of the ivestment let along a 10% return - we all lost money in real estate in 2008. IF you invest esp at a 10% you gotta recognize there's some risk otherwise 99.9% of the worlds money would be there where 10% is gauranteed. Doesn't sound like these guys stole anything. This company colapsed and exposed some errors just as thousands of other companys did in 2008 that did not recieve a govt bailout. This again was in real estate - hardest hit segments in the hardest hit area - nearly all of us lost money at this time both in real esate and investment - its a sad story but investors gotta take some responsibility that it was prob a bad investment in a bad segment at one of the worst times economically
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Posted by Jake, a resident of another community, on Sep 26, 2012 at 9:54 am Again it seems white collar crime pays, 18 months for that much money and peoples lives destroyed is a joke. As others have already said, if you robbed the local 7-11 of a few hundred dollars you would probably do more time.
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Posted by Not Sad, a resident of the Old Palo Alto neighborhood, on Sep 26, 2012 at 10:35 am I am sure the prominant people were those that have been reaping the benefits of these thieves for years. Investors who received great returns on the broken backs of the people who this group ripped off. From their perspective these were great guys. Of course there were those in Germany in the 40"s who thought the same thing from those that enpowered them to make a lot of money. Who cares how it was procured.
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Posted by musical, a resident of the Palo Verde neighborhood, on Sep 26, 2012 at 11:55 am I don't associate fraud with any threat of violence, which is the difference between this and robbery.
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Posted by lock them up, a resident of the Embarcadero Oaks/Leland neighborhood, on Sep 27, 2012 at 7:52 pm Anyone who defrauds a senior should be locked up.
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Posted by Old Palo Alto, a resident of the Old Palo Alto neighborhood, on Oct 17, 2012 at 3:09 pm So what was Edward Locker's sentence?
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