A Marin County, California, mortgage broker pleaded guilty last month to 14 federal counts related to a $2.4 million scheme to defraud investors.

Paul Sloane Davis, 75, who operated financial services company D.M. Financial, diverted investor funds for personal use or to make interest payments to prior investors to keep them from discovering the scheme, according to U.S. Attorney Melinda Haag. Davis offered investors the opportunity to fund purported short-term “bridge loans” to borrowers he said needed short-term financing for real estate transactions.

But according to authorities, the borrowers never received the investors’ money and were not even aware that their identities had been used to solicit investments. Instead, Davis used the money to pay rent, eat at restaurants and take out cash advances at casinos, according to his indictment.

Davis’ co-conspirator, Diane Cobb, 57, was also charged. The pair was arrested in Las Vegas in November 2013. The prosecution came after a yearlong investigation by the Federal Bureau of Investigation.

Cobb pleaded guilty in July 2014 and is due back in court for sentencing on May 6.

Davis has a July 1 court date. The maximum penalty for each count of mail fraud, wire fraud and conspiracy is 20 years in prison and a $250,000 fine. Davis and Cobb could also be ordered to pay additional fines and restitution to the investors harmed by their scheme.

Email Amy Swinderman.

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