According to a federal bankruptcy judge’s ruling this week, executives of investment firm iCap operated a Ponzi scheme from 2013 to 2022 after their real estate portfolio failed to produce expected results.
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The Bellevue-based investment firm iCap is facing potential closure following a federal judge’s ruling in the Yakima bankruptcy court, stating that the company’s former leaders defrauded investors of $230 million in a Ponzi scheme over several years.
As initially reported by The Seattle Times on Friday, Chief Judge Whitman Holt’s Oct. 15 ruling highlighted significant evidence that iCap used investors’ funds to repay other investors instead of fulfilling monthly interest payments promised from various real estate projects in the Greater Seattle Area.
Attorneys for investors revealed that former iCap leaders Chris and Jim Christensen falsely claimed that the investments were generating profits, while an audit showed that the company only made $1.4 million in profits from 2013 to 2022, falling short by $228.6 million of what was owed to investors.
Judge Holt criticized iCap’s low rate of return, suggesting that investors would have been better off investing in Treasury bonds. Following a restructuring, iCap’s portfolio has been sold off, but proceeds have primarily gone towards bankruptcy proceedings, leaving investors unpaid.
The Seattle Times mentioned that Judge Holt’s ruling sets the stage for potential legal action against the Christensens and other parties involved in the scheme. Investors may also be eligible for tax deductions on their iCap investments.
While Jim Christensen declined to comment, Chris Christensen disputed the Ponzi scheme allegations to The Seattle Times.
Email Marian McPherson