A Seattle developer faces nearly four years in prison after being convicted of a longtime scheme to lure business owners into buying space in properties he claimed to be building or developing.
U.S. Securities and Exchange Commission
|In 2005, the business owner and his company were found in violation of Washington State security laws. Anthone was ordered to pay $10,000 fine.|
On Wednesday (Oct. 17), a King County, WA, jury convicted Laurance Anthone, owner of MA Quik Framing Inc., of eight criminal counts of theft and securities fraud.
In previous civil cases dating to 2004, victims of Anthone's schemes were awarded $600,000 in damages, according to reports.
And in February 2005, the business owner and his Tukwila, WA, land acquisition and development company were found in violation of state security laws.
In that case, court documents say, he promised to pay the investor “an extraordinary return (typically 200%) within a four or six-month period.” Anthone was not a registered securities dealer and was ordered to pay a $10,000 fine.
Years of Scheming
In the current case, prosecutors say Anthone took more than $600,000 in investment capital from business owners through a number of schemes from early 2003 to August 2005.
Due to a three-year-statute of limitations, however, he was not prosecuted for many of the crimes of which he was suspected, reports said. He originally faced 19 counts, but those were amended to 10. The jury was unable to reach a decision on two of the counts last week.
Prosecutors said Anthone offered to sell at least 31 investors commercial or residential space in buildings he claimed to be building or had an interest in.
Anthone, then 45, accepted investments ranging from $10,000 to $327,000 from at least six investors after talking them into locating their commercial enterprises inside the developments.
How it Worked
The state's trial memo said Anthone had decided to become a property developer "after working several years in the construction business with little or no experience in property development." The unlicensed contractor opened his office in late 2002 or early 2003, decorating it with maps and architectural drawings of projects, the state said.
Then, he began to solicit family, friends and acquaintances to invest with him. He spent little or no money of his own on the projects.
Anthone then bought properties that were difficult to develop, "often promising owners a price above market value if the owners would agree to carry a contract and to subordinate their interest to a construction lender," court documents said. He gave the owners promissory notes, then soon defaulted, prosecutors said.
Investors, meanwhile, were "enticed to invest in 'joint venture' or 'profit-sharing' agreements by Anthone's promises of high returns or developed lots." The money went into Anthone's accounts, and then generally to his personal expenses, prosecutors said.
"Little of the investors' money was used to develop any property."
Retirement Fund Raided
In one case, Anthone reportedly encouraged a recently laid-off Boeing Company employee to draw down her retirement fund and refinance her home mortgage in order to buy two office spaces.
Later, the woman, like others before her, caught wind that Anthone had not acquired any permits or financing to complete the project, reports said.
“Fluent in the arcane language of real estate, Anthone wore the cloak of experience and success,” according to the Seattle Post-Intelligencer. On his office walls, he hung architectural drawings of projects named “Queens Plaza” and “Eden Estates,” the news outlet said.
When the projects failed to come to fruition, Anthone refused to return the investors’ money, prosecutors said.
Before being criminally charged in August 2008, Anthone faced a series of civil lawsuits for the investment schemes. The plaintiffs were awarded $600,000 in damages through those civil actions, reports note.
‘Attack from Bad Buyers’
In a 2005 interview with the Post-Intelligencer, while facing as many as 14 civil lawsuits, Anthone said he was the victim of an orchestrated attack by former employees and “bad buyers.”
The contractor/developer said the lawsuits and harassment by investors had hindered his business and his ability to complete projects.
At that time, he said he was working 20 hours a day to “get the projects done.”
Anthone is scheduled for sentencing Dec. 7. The sentencing range is 33 to 43 months in prison.
He has not been jailed in the case.