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.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Prepare for this fall with top agents & brokers at Connect Now on September 21.GET YOUR TICKET×
Limited time: Get 30 days of Inman Select for $5.SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription