A Clifton Park couple who bilked an estimated 15 investors out of $1.6 million in a fraudulent real estate pyramid scheme plead guilty in federal court today to mail fraud.
Steven and Jeanne O’Brien appeared before Judge Thomas J. McAvoy in U.S. District Court in Albany and could each face up to 20 years in prison and a fine of up to $250,000 when they are sentenced in May.
The couple started Save-A-Home, LLC in 1998, which they operated from their home and from a commercial location on Route 9 in Clifton Park.
They solicited investors and promised above-market rate of returns as high as 20 to 30 percent within several months of sale of a property.
Beginning with a single investor, Save-A-Home purchased and resold a few real estate properties, returning the promised rate of return to the investor. The investor referred several friends to the O’Briens as potential investors. More than 20 investors, from New York and New Jersey, gave the O’Briens cash investments under Save-A-Home agreements.
U.S. Attorney Glen Suddaby said Save-A-Home stopped acquiring real estate shortly into its operation, was not profitable, and didn’t have enough money to generate returns as promised.
Yet, the O’Briens continued to encourage investors and made money from investors by operating a pyramid scheme and used funds obtained from later investors (those at the bottom of the pyramid) to pay returns to early investors (those at the top of the scheme), he said.
The couple has agreed to pay restitution to the victims.