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Brown: AGA Financial partners 'callously swindled' investors

  • 3/5/2009:A1: Gary Armitage, left, and attorney Russell Marne walk to U.S. Bankruptcy Court in Santa Rosa on Wednesday.

    PC: News/--Gary Armitage, left and bankruptcy attorney Russell Marne walk towards Federal Bankruptcy Court in Santa Rosa, Wednesday March 4, 2009 to answer questions of his assets. Behind him is wife Floy Nell Armitage. Armitage owned AGA Financial that collapsed last fall . (Kent Porter / The Press Democrat)2009

A 48-page arrest warrant for the three men reveals a tangled web of investments that form the backbone of the state?s case.

Attorney General?s office investigators charged that Armitage, Guidi and Koenig created a network of 55 business ventures over a 10-year period to enrich themselves and keep their alleged Ponzi scheme afloat.

In 1997, the three men began selling construction and real estate projects throughout California, according to the allegations.

Victims were promised that these were safe, secure, low-risk investments with double-digit returns, averaging 12 percent or better, the arrest warrant says.

To recruit investors, Armitage organized ?investment planning seminars? in the Bay Area and across the state, Brown said.

Investment sums ranged from $50,000 to $1 million, with some people investing their entire retirement portfolios and savings accounts, according to the allegations.

Many of the construction and real estate projects were poorly managed and were not financially viable, resulting in huge losses. Other projects were not finished or ended up in foreclosure.

Koenig, Armitage and Guidi then sought to attract new investors, whose funds could be used to offset losses and pay returns to earlier investors. By not telling investors about the failures, prosecutors alleged the defendants withheld vital information that impacted investment decisions.

Most investors reported they were not provided with any written disclosures about the offerings, but were simply assured their investments were safe. Subsequent documents failed to disclose that Koenig had been convicted of mail fraud in 1986 and ordered to repay up to $5 million, the warrant said.

Beginning in 2001, Koenig, Armitage and Guidi redirected investors? millions into the purchase of more than 20 senior housing and residential care facilities.


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