Alleged primary conspirators in a $14 million real estate investment scheme Louis Zimmerle and Brett Barber were arrested on Oct. 28. Zimmerle and Barber are Orange County business owners and former real estate agents.
The scheme started in 2012, when Barber was called in for questioning by the Financial Industry Regulatory Authority (FINRA) in connection with an investigation of his questionable business activities. After his failure to appear, FINRA subsequently barred Barber from acting as, or associating with, a broker-dealer.
Following this disciplinary action, the California Department of Business and Oversight denied Barber’s company, Mission Advisory Services, an investment adviser certificate in 2015. The department also prohibited Barber from all positions of employment, management and control involved with any investment adviser, broker-dealer or commodity adviser.
Barber and Zimmerle later registered their investment company, BNZ Capital One, under limited liability in 2019. Doing so protected their assets from potential claims against the company.
Operating as BNZ Capital One, Barber and Zimmerle offered investment opportunities for purchasing and flipping properties in both real estate and land development. The pair promised 10% in yearly returns to their investors and allegedly failed to disclose Barber’s previous sanctions.
Starting in June 2019, BNZ acquired roughly 105 investors and raised a minimum of $13.5 million. However, Barber and Zimmerle only invested $6.4 million of these funds. The majority of the money funded previous investors’ returns and another company owned by the pair, Relief Defendant Guaranteed Income Solutions, Inc. (GIS).
According to allegations made by the U.S. Securities and Exchange Commission (SEC), “BNZ … generated barely $300,000 in profits, and made at least $1.7 million in Ponzi-like payments to investors … despite BNZ’s low profits, BNZ transferred more than $1.6 million to GIS and more than $700,000 to Zimmerle, while also paying certain of Barber’s and Zimmerle’s personal expenses, including for vehicles, meals and travel.”
At his arraignment, Barber pled not guilty to four counts of wire fraud and two counts of money laundering. If convicted, Barber could face up to 30 years of federal prison time. His current bond is set at $800,000 with his trial set for Dec. 21.
Zimmerle pled guilty at his arraignment to one count of wire fraud, in which he confessed to the personal acquisition of $582,815 in investors’ funding.
In addition to their charges, the pair also face a civil lawsuit filed by the SEC.
“The complaint here alleges that when defendants failed to earn sufficient profits in order to pay investor returns, they made Ponzi-like payments to investors using other investors’ money, and, separately, also used investor funds to pay themselves handsomely,” SEC Los Angeles Regional Office director Michele Wein Layne said. “Individuals who engage in such misconduct should expect to be held accountable for their actions by the SEC.”
Erin Boshers is a City News Intern for the fall 2021 quarter. She can be reached at firstname.lastname@example.org.