Two men will do prison time in what prosecutors called one of the largest real estate Ponzi schemes in California history, with investor losses estimated at $250 million. James Stanley Koenig, 60, could face 50 years in prison after being convicted this week in Shasta County Superior Court on 35 of 36 felony counts and two counts of first-degree burglary. Gary Armitage, 62, was previously sentenced to 10 years in prison after pleading guilty.

Prosecutors said that beginning in 1997, Koenig and Armitage “created a number of companies and affiliates for the purpose of obtaining, financing, leasing, managing and disposing of property,” and another firm, ePlanning Securities Inc., a broker-dealer that was used to sell the securities that were necessary to obtain the properties.

Later, Koenig and Armitage specialized in obtaining residential care facilities and selling undivided tenant-in-common interest in the properties.

“Early failures of a number of the companies were covered by related entities to continue investor confidence in the continuing offered investment products,” prosecutors said. “The debt load from these past failures and the overvaluation of offered properties created a situation where new investors were needed to fund established investors. To create new funding the companies started purchasing their own property back from original investors and resold it to new investors at substantially increased values,” until the scheme collapsed in June 2008.


Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
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