Feds: Irvine real estate broker deserves five years in prison

The Orange County Register on April 13, 2012 released the following:


Federal prosecutors are recommending a sentence of no more than five years and three months for David R. Sparks, the Irvine real estate broker who swindled $4.3 million from 34 victims in a Ponzi scheme.

Sparks is a former planning commissioner for Irvine who resigned the post just after the FBI began investigating his business dealings. He took money from family members, close friends and acquaintances, prosecutors said.

U.S. attorneys filed their formal recommendation petition, the result of a plea agreement, on Thursday.

“The government notes that prior to being charged, defendant took full responsibility for his fraud and pleaded guilty,” the document states. “By doing so, defendant saved the government considerable resources which were, in turn, used to pursue other investigations.”

Sparks’ sentencing hearing is May 7 at the federal courthouse in Santa Ana. Judge Cormac J. Carney, who is handling the case, is not bound by the five-year recommendation. Sparks faces a maximum prison term of 20 years.

He pleaded guilty in July to one count of felony interstate wire fraud. The plea deal calls for Sparks to repay the $4.3 million he took from his victims.

That figure does not include any taxes the victims paid on the false profits, the costs incurred in the ordeal or interest payments and late fees promised in the investment agreements. Victims may seek reimbursement for that money via civil lawsuits.

He was first scheduled to be sentenced in December, but that was postponed at the request of his legal team when he encountered some health issues. Prosecutors supported the postponement so as to not burden the prison health care system with expensive medical procedures for Sparks that could have included heart surgery, court records show.

The real estate license for his company, Sparks Realty & Investment Inc., has yet to be revoked, according to a state-run online database.

Details from the criminal case documents, two uncontested civil lawsuits and victim statements to The Orange County Register paint a picture of Sparks as a charming man who claimed to be buying, rehabbing and selling foreclosed or pre-foreclosure homes that he never actually purchased.

He forged bank documents, used non-existent escrow companies, provided bogus status updates and falsely reported significant profits, the lawsuits claimed. If the investors did not want to reinvest their money with him, Sparks made up excuses for why he could not give it back.

The defendant started speculative real estate investing in the late 1980s, according to the plea agreement. In 2005, he believed that real property in Utah’s Cedar City was likely to see a dramatic increase in value, so he used his own funds and investor cash to buy 35 properties for approximately $7 million in Utah and California, the document says.

By 2007, the rents Sparks was collecting from the properties were no longer sufficient to cover the debt service. Sparks began soliciting cash from investors to cover the debts – deliberately lying to them by telling them the funds would be used to buy new properties.

To back up his lies to investors, Sparks created false paperwork.

Sparks took in about $4.8 million under the false pretenses. He spent about $500,000 on “lulling payments” to the investors and about $4.3 million on his debt, the plea agreement states.

Some assets are to be transferred to the United States government to liquidate. If his current assets and cash can’t cover the restitution, he will presumably have to pay the rest of it back from his earnings once he gets out of prison, if he goes to prison.

Two lawsuits were already filed in January – one by a 22-year friend of Sparks from Santa Ana and one by a married couple from Wisconsin. Sparks never responded to the courts, which handed the plaintiffs default judgments.

The FBI’s investigation did not find any evidence that Sparks is in possession of a large sum of money. But some victims still believe he has money stashed away somewhere.

The FBI began investigating Sparks in January of 2011. Sparks resigned from the Irvine Planning Commission in February of the same year.”


Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Mail Fraud Crimes


To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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