Reported by Heidi Groover

The FBI appears to have launched an investigation into a Bellevue-based real estate investment firm, the first indication that the company’s former executives could face criminal charges connected to allegations they ran a Ponzi scheme. 

For at least the last decade, iCap raised money from investors in Washington state and elsewhere, promising to invest in Seattle-area real estate projects. But last spring, investors grew concerned as the company stopped making monthly interest payments. By the fall, iCap filed for bankruptcy and a third-party restructuring firm, Paladin, took over. 

Paladin said last month it believed iCap was a Ponzi scheme, using investor funds to repay other investors while doing little of the real estate redevelopment it promised. According to bankruptcy filings, the company owes 1,800 investors and other entities a total of $250 million.

As part of the bankruptcy case, attorneys for former CEO Chris Christensen wrote in court filings last week that the U.S. Securities and Exchange Commission and FBI “recently opened a criminal investigation into iCap.” 

“It is too soon to know whether the investigation will lead to any indictments or who the targets are,” Christensen’s attorneys wrote, urging the court to hold off on determining whether the company was a Ponzi scheme “until the parties have a clearer understanding of the criminal investigation.”

Christensen has denied that the operation was a Ponzi scheme.

The restructuring company last month urged a bankruptcy judge to find that iCap operated a Ponzi scheme, alleging that most of iCap’s income came from investors, not from real estate projects, and that iCap used most of its cash to make payments to investors, not for real estate projects. 

Read full report: https://www.seattletimes.com/business/real-estate/fbi-is-investigating-eastside-real-estate-firm-icap-lawyers-say/