David Arthur Nilsen and Manuel Antonio Errico Accused of Fraud in Connection with the Cedar Funding Scheme
David Arthur Nilsen and Manoel Antonio Errico, of Monterey, Calif., were recently indicted in California federal district court for securities fraud.
According to the indictment, Nilsen and Errico defrauded investors in Cedar Funding, a Monterey-based lender. More than 1,000 investors are estimated to have lost over $100 million in the Cedar Funding scheme.
Investigation by the securities law firm of Chapman & Associates determined that Nilsen and Errico told customers their money would be invested in loans purportedly secured by deeds of trust, and their principal would be safe. Nilsen and Errico assured investors their funds would generate high returns.
However, contrary to Nilsen and Errico's representations, it appears most of Cedar Funding's loans were not performing well. Without notifying their investors, Nilsen and Errico appear to have extended the loan maturity dates, subsidized failing loans, and increased the likelihood that investors would lose their money.
Also, Chapman & Associates' investigation indicates Nilsen and Errico used funds from new investors to pay supposed returns to existing investors. "This is the typical sign of a Ponzi scheme," said John Chapman, a securities attorney.
Chapman & Associates determined that certain Cedar Funding investors may have invested in that scheme through registered broker-dealer firms. "Broker-dealers have a duty to adequately investigate an investment before recommending it to their customers," said Chapman. "Those investors who bought into the Cedar Funding opportunity through a broker-dealer firm or its agent may have a claim for their losses against that broker-dealer," Chapman stated.
Investors in the Cedar Funding scheme, who purchased through an investment professional, are encouraged to contact the Chapman & Associates attorney for a free evaluation of their claim against the brokerage firm that employed that professional. Please call 866-220-3300 or 216-241-8172 and ask for John Chapman or Alin Rosca.