Former Santa Rosa securities broker Jeff Guidi has struck a plea bargain with state prosecutors, who have agreed to drop felony fraud charges in exchange for his testimony in one of the largest alleged Ponzi schemes in state history.
Guidi agreed to testify against his former business partner, AGA Financial founder Gary Armitage, and a third colleague charged with orchestrating a $200 million real estate scam that targeted more than 2,000 victims across Northern California.
The three men have been at the center of a lengthy preliminary hearing in Shasta County Superior Court to determine if there is enough evidence to place them on trial.
But on Thursday, Guidi and prosecutors reached a plea agreement that will result in him serving no additional jail time.
"Mr. Guidi is grateful to the Deputy Attorney General for recognizing that he was not responsible for and did not know about the financial debacle at AREI, as recognized by his agreement to plead no contest to a misdemeanor count," his attorney said in a statement.
AREI stands for Asset Real Estate & Investment, the Redding-based firm at the center of the alleged Ponzi scheme. It is owned by the third defendant in the case, Redding businessman James Koenig.
AGA Financial funneled the savings of hundreds of Bay Area investors, many of them elderly, into tax-free real estate investments managed by AREI.
The plea agreement calls for Guidi to cooperate fully with the Attorney General in its investigation, including testifying truthfully against his two co-defendants, according to the deal.
In addition, Guidi must repay three investors nearly $300,000 in restitution and give up his broker's license for three years.
If he does both, prosecutors have agreed to drop the felony fraud and burglary charges against Guidi, which could have sent him to prison for 25 years.
Instead, prosecutors will allow Guidi to plead no contest to a single misdemeanor securities violation. He would be sentenced to time served and three years of probation, according to the agreement.
Guidi, 53, served 27 days in Shasta County Jail after his May 2009 arrest. He later was released on $1 million bail.
San Anselmo resident Joan Sullivan said she was not surprised by the plea. Her husband, 77-year-old George Sullivan, testified during the hearing that he lost at least $170,000.
"Of the three that were up there, I think he was the least complicit," Sullivan said of Guidi. "I don't think he was in the thick of it."
The deal caps what has been a long campaign by Guidi to distance himself from his co-defendants, whom he says duped him.
In arguing for bail last year, Guidi's attorney, Ted Cassman of Berkeley, argued that his client was merely a securities broker and didn't create or control the investments at the heart of the case against Armitage and Koenig.
During the preliminary hearing, Cassman presented evidence that Armitage and Koenig kept Guidi in the dark about the problems once the investments began to falter.
"He was misled and he was deceived," Cassman told the court. Deputy Attorney General Robert Morgester called Guidi a "unique individual" in the case.
He differed from his co-defendants in several ways.
He was released on $1 million bail after family members put up their homes as collateral. He hired two private attorneys, while his co-defendants are represented by public defenders.
And during the hearing Guidi seemed more relaxed and upbeat than the other two. He also smiled at and tried to make eye contact with his clients, even as they were testifying about the losses they suffered.
Prosecutors tried to show that Guidi never told investors that Koenig had earlier been convicted of fraud, and that he failed to alert them to problems with their investments. But statements by defense attorneys suggested they planned to argue that Guidi was advised that he wasn't required to disclose that fact. Attorneys for e-Planning Securities Inc., the Roseville-based broker dealer that approved the investments, advised brokers that they did not have to disclose Koenig's felony investment fraud conviction because it was more than 10 years old.
Prosecutors tried to show that Guidi was more than just a broker. They pointed out that he was a shareholder and boardmember of e-Planning Securities Inc., and was an owner and board member of Lakeside Financial Group, which managed one of the investment funds he put clients in.
This opened him up to claims that he had a conflict of interest because he was putting clients in investments in which he had a hidden financial stake.
But the impact of that conflict was lessened by its disclosure in the financial documents that investors signed.
"Mr. Guidi sincerely regrets that he did not act more aggressively to unearth the facts about AREI," his attorney said in a statement. "He looks forward to continuing to try to help those who were injured by the AREI catastrophe and he intends to assist in every way possible the Attorney General's pursuit of justice in this matter."
UPDATED: Please read and follow our commenting policy: