News

Real estate investor gets five-year federal sentence

James Stanley Ward and others bilked investors in fraud scheme

A longtime Palo Alto and Mountain View real estate investor has received a five-year federal prison term on Aug. 20 for bilking private lenders of millions of dollars, according to a federal prosecutor.

James Stanley Ward, 65, faced 18 counts including conspiracy, mail fraud and wire fraud after he deceived investors through his Mountain View-based company Jim Ward & Associates, Inc., and its successor, JSW Financial, Inc.

According to separate civil charges brought by the U.S. Securities and Exchange Commission, Ward and his three co-defendants propped up their failing real estate development projects while concealing $17 million losses of investor money.

The men -- Ward and co-defendants Richard F. Tipton, 62, of Palo Alto, 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.

As the enterprise collapsed, investors continued receiving monthly statements showing steady growth in the value of their portfolios, according to the SEC.

The SEC also alleged that Ward and co-defendant Edward George Locker took $900,000 of investor money to purchase homes for themselves.

Last December, Ward pleaded guilty to one count of conspiracy to commit mail and wire fraud. Prosecutors had asked the court to impose an eight-year-and-one-month sentence, but the court took the middle road. Ward will serve five years in prison and will be on supervised probation for three years, including one year of home detention. A restitution hearing will take place within 90 days, Jack Gillund, U.S. Department of Justice Public Affairs spokesman, said.

In his guilty plea Ward admitted that from September 2005 through October 2008, the men gave investors documents that purported the funds were invested in loans that were secured by deeds of trust on California real estate, but the men knew that those representations were false, according to the indictment. The companies did not secure investments in either the Blue Chip Realty Fund, LLC or the Shoreline Investment Fund, LLC, according to the indictment.

In November 2008, Ward and the others informed investors through the company's bankruptcy attorney that the company was broke, the funds were unsecured and investors would not likely recover any money. Many of the investors were retirees, according to court documents.

One 74-year-old victim reported that she lost all of her life savings and was in jeopardy of losing her home. Her daughter had to return home to help out with expenses, according to prosecutors.

A retired journalist reported losing 25 percent of his net worth, and another retiree said she was "extremely traumatized" and "found (her)self crying constantly," prosecutors said.

Ward was not as active in the fraud as was Locker, Tipton and Lin, according to prosecutors. He sold JSW in 2006 to Locker, Tipton and Lin but continued to participate in the business' operations in the same manner. He was responsible for investor relations, loan decisions, project management and property acquisitions. He also received $20,000 per month for his role at Columbiana Development, Inc., a general contractor business in the same building as JSW, according to court papers.

Although he had semi-retired and spent most of his time living in Ohio, he knew of the fraud that was mainly perpetrated by the other defendants. And although Ward's real estate license was revoked, he continued to tout the business to investors and did not disclose the frauds, prosecutors said.

But prosecutors said the government believes Ward and the other co-defendants did not set out to defraud investors or to enrich himself with fraud proceeds.

"Ward, who has a long track record in the hard-money lending business and who was well known in the Peninsula community, held the subjective hope that he, Locker, Tipton and Lin could turn the business around, given more time for the market to improve and a hiatus from the crushing monthly interest payment obligations. Unfortunately for the investors (and ultimately for the defendants), Ward and his co-defendants chose criminal deception as the means to that end," prosecutors said in court documents for his sentencing. Up to the time of the crime, he has conducted his business affairs "in a completely blameless manner," they stated.

An Ohio businessman who has known Ward and who spoke on the condition of anonymity said Ward was an extremely successful businessman, and many locals invested with him over the years without problems.

"We are baffled by these events as he was a local icon and regarded highly by most. Our thoughts are with him and his family and we hope they make it through this in one piece," he said in an email to the Weekly.

Ward is a native of Columbiana, Ohio, who was a track star and went to Stanford University on track scholarship, according to the associate. He lived in Palo Alto most of his life and moved to Delaware, Ohio, a few years ago when he retired or was semi-retired. He frequently returned to Mountain View to conduct business.

Ward's attorney, Acting Federal Public Defender Geoffrey Hansen, could not be reached for comment.

Tipton, Lin and Locker are due to be sentenced on Sept. 10 in federal court in San Francisco.

Comments

14 people like this
Posted by Hmmm
a resident of East Palo Alto
on Aug 23, 2012 at 5:19 pm

Growing older in the clink - no fun. [Portion removed by Palo Alto Online staff.]

So what happens? Ultimately, do their personal properties get sold to help pay back the victims?


17 people like this
Posted by mugs
a resident of Adobe-Meadow
on Aug 23, 2012 at 7:55 pm

18 criminal counts and no mug shots? Why does the media go so easy on rich criminals?


20 people like this
Posted by Wondering?
a resident of Another Palo Alto neighborhood
on Aug 23, 2012 at 8:45 pm

This case seems to have gone back to 2005--
Web Link

Wonder why it has taken this long to conclude?


6 people like this
Posted by Anon.
a resident of Crescent Park
on Aug 23, 2012 at 10:02 pm

At least someone put the basic headlines of the story in these little stubs please ....

>> A longtime Palo Alto and Mountain View real estate investor has received a five-year federal prison term on Aug. 20 for bilking private lenders of millions of dollars, according to a federal prosecutor.

James Stanley Ward, 65, faced 18 counts including conspiracy, mail fraud and wire fraud after he deceived investors through his Mountain View-based company Jim Ward & Associates, Inc., and its successor, JSW Financial, Inc.

According to separate civil charges brought by the U.S. Securities and Exchange Commission, Ward and his three co-defendants propped up their failing real estate development projects while concealing $17 million losses of investor money.

The men -- Ward and co-defendants Richard F. Tipton, 62, of Palo Alto, 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.


16 people like this
Posted by Cid Young
a resident of another community
on Aug 24, 2012 at 11:08 am

"So what happens? Ultimately, do their personal properties get sold to help pay back the victims?"

-NOPE, probably will go to the Lawyers.


30 people like this
Posted by Patricia Wesley
a resident of Old Palo Alto
on Aug 24, 2012 at 1:02 pm

Having been one of the investors I can say we would all like to know where the money went and if there will be restitution. Ward was always the instigator and lied continually, even when questioned by investors early onface to face. It was a pyramid scheme from the beginning and resulted in a lot of ruined lives. There is an old saying, If it waddles like a duck and quacks like a duck, you can bet its a duck". I can guarantee you Mr Ward and associates are all Ducks.


26 people like this
Posted by Johnny
a resident of Old Palo Alto
on Aug 24, 2012 at 2:57 pm

The carnage left behind by Mr. Ward and associates dates way before this. Many poor naive developers and builders have been taken to the cleaners by this morally bankrupt group , I guess when you have gotten away with being an "astute businessman" for so long you feel entitled to other peoples money. I just hope that the investors recoup most of their investment.


11 people like this
Posted by Curious
a resident of Triple El
on Aug 24, 2012 at 3:13 pm

Whatever happened to Ward's attorney and partner David Lee?


19 people like this
Posted by pete
a resident of Mountain View
on Aug 27, 2012 at 7:39 am

There are others with Pozi schemmes in 2008 that are still walking free. At least these were prosecuted.


2 people like this
Posted by Midtown friend
a resident of South of Midtown
on Aug 28, 2012 at 10:36 am

We know one of the co-defendents -- he and their families lost everything they had. Very sad--


23 people like this
Posted by Hmmm
a resident of East Palo Alto
on Aug 28, 2012 at 10:46 am

It was sad for one of the defendants? What about their VICTIMS? Sheesh.


14 people like this
Posted by skygal
a resident of Woodside
on Jan 23, 2013 at 5:34 pm

Jim Ward is in jail (Morgantown West, VA) go to Bureau of Fed. Prisons and search-and he's in there. Release date: 5/2017. Some legacy for the big track man...yikes 66 and in jail. Nice.


20 people like this
Posted by Randy
a resident of another community
on Jan 29, 2016 at 2:07 pm

Does anybody know if this is the same Jim Ward that had "Ward Racing"? If so if you could let me know that would be great. Thank you logansgp@yahoo.com


19 people like this
Posted by @Randy
a resident of Another Palo Alto neighborhood
on Jan 29, 2016 at 2:23 pm

I believe the Jim Ward you refer to is more like 70+ years old. He retired at least 15 years ago, and as far as I know, still lives in Ohio, where he moved when he turned 55.


14 people like this
Posted by AlexDeLarge
a resident of Midtown
on Jan 29, 2016 at 5:21 pm

@Randy Yes, it is the same Jim Ward from Jim Ward Racing. He's a friend of of mine and it's quite sad to see what he's done to himself.


17 people like this
Posted by @Randy
a resident of Another Palo Alto neighborhood
on Jan 29, 2016 at 6:45 pm

I'm wondering what happened to his gold-digger wife.... She was furious when he told her he wanted to retire and move to Ohio.
I knew her well, and before she married him she ONLY dated wealthy men who gave her very pricey gifts ( diamonds, horses, cars, etc). They married when he was 55 and she was 25. That was around 1999-2000, I believe. She quit her job right after they met, before they were even engaged!


11 people like this
Posted by AlexDeLarge
a resident of Midtown
on Jan 30, 2016 at 12:11 pm

@@Randy The money went and so did she.


Sorry, but further commenting on this topic has been closed.

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