A PROFITABLE SUNRISE-LIKE SCHEME: American ‘Hard Money’ Ponzi Fugitive Who Fled To Brazil Arrested in Panama While Trying To Cross Border Into Costa Rica, Orange County (Calif.) District Attorney Says

ponziblotterThomas Franklin Tarbutton, a purported “hard-money lender” who operated a $3 million Ponzi scheme in California and fled to Brazil, was detained by authorities Dec. 14 in Panama while trying to cross the border into Costa Rica, the office of Orange County (Calif.) District Attorney Tony Rackauckas said.

Tarbutton, 54, of Newport Beach, was held in Panama on a 2011 U.S. warrant and has been returned to the United States, prosecutors said. He is listed as an inmate at the Central Men’s Jail in Orange County.

Twenty-nine felony counts have been filed against him, prosecutors said.

Bail was set at $2 million, and Tarbutton must “prove that the money is from a legal and legitimate source before posting bond,” prosecutors said.

His company, Villa Capital Inc., operated as a “hard-money lender” with “private investors,” positioning itself as as an outlet for “borrowers looking for funds from non-bank lenders,” prosecutors said.

PP Blog readers may recall the alleged Profitable Sunrise pyramid scheme was positioned in largely the same fashion. Profitable Sunrise may have gathered tens of millions of dollars using offshore conduits, the SEC said in April 2013.

From a statement by Orange County prosecutors on the arrest of Villa Capital Inc.’s Tarbutton (italics added):

Between 2004 and 2010, Tarbutton is accused of operating Villa Capital Inc. as a “hard money” lender by soliciting money from private investors for borrowers looking for funds from non-bank lenders. The defendant is accused of defrauding nine people in a Ponzi real estate fraud scheme. A “Ponzi” scheme is a fraudulent scheme 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.

Tarbutton is accused of embezzling from his private investors by keeping the money they lent for borrowers and not funding the loans as promised. He is accused of providing his victims with fraudulent and forged real estate documents from the Orange County Clerk-Recorder Department showing that they were lien holders on property deeds. He is accused of supplying investors with false and forged mortgage payments and fraudulent documents of investment of the mortgage payments. The defendant is accused of supplying investors with small interest payments using funds from their initial investment to prevent them from discovering that the loans had not been repaid. He is accused of stopping all payments when the real estate market collapsed.

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