Calabasas Resident Accused of Running Ponzi Scheme

Bruce Fred Freidman, 60, of Calabasas was accused of running a $200 million Ponzi scheme in a Security and Exchange Commission lawsuit filed in U.S. district court.

Friedman operated an investment service that specialized in income-producing real estate. Clients had been satisfied with regular monthly returns on their money.

In a 2008 letter sent to his clients, Friedman acknowledged a previously undisclosed criminal past. He admitted to spending two years in prison in the 1980s after being convicted of grand theft relating to the theft of $300,000 from his employer, Avery Dennis Corp. In addition to his criminal conviction, he also declared personal bankruptcy in 1993.

The Security and Exchange Commission filed suit shortly thereafter alleging his failure to notify investors of his criminal past constituted fraud. The suit is not part of a criminal investigation because federal law does not require private fund managers to disclose personal information to potential investors.

Although denying that he operated a Ponzi scheme, Friedman has allowed his assets to be frozen and for the court to appoint a receiver to liquidate his assets. It is likely that investors will only receive a fraction of their money.

The SEC complaint also alleges that $57 million of investor money was diverted to Friedman’s personal use. This includes $16 million in real estate purchases for friends and family, $8.9 million on private jet travels, and a $250,000 Bentley luxury automobile.

“That was my life savings. I didn’t really have anything else,” said one investor to the Los Angeles Times. “We had a lot of plans. They’re gone now…. It’s a sad thing.”

For more information, read the Los Angels Times here.