The United States Attorney's Office

NEWPORT BEACH MAN WHO RAN PONZI SCHEME THAT COST VICTIMS NEARLY $4.2 MILLION GETS 6½-YEAR PRISON TERM

A Newport Beach man who pleaded guilty last year to federal fraud and money laundering charges, admitting that he ran a bogus investment program that promised rates of return of at least 10 percent per quarter, was sentenced today to78 months in federal prison.

John Carl Willy, 64, was sentenced by United States District Judge Cormac J. Carney in Santa Ana. Following the sentencing, Judge Carney remanded Willy into custody. In addition to the prison term, Judge Carney ordered Willy to pay $4,192,929 in restitution to 21 victims of his scheme.

Willy pleaded guilty in January to two counts of wire fraud and one count of money laundering. In a plea agreement filed in United States District Court, Willy admitted that he induced investors to give him money by falsely promising to use the funds to generate returns through investment in a European investment program. Using the business names Coastal View Investments (CVI) and Luxin Limited, Willy told investors that these entities participated in a program through the Federal Reserve Bank that allowed CVI and Luxin to deposit funds with a bank in London, and that European banks could use the funds as collateral. Willy falsely promised investors that the funds would never leave the London bank account and that the program was protected by an insurance policy underwritten by AIG. Victims were told that their money would earn 10 percent every quarter.

However, as he admitted in the plea agreement, Willy used the investors’ funds to enrich himself, to operate CVI and Luxin, and to further promote the scheme. He used investor money to buy a home in Newport Coast, as well as to acquire automobiles, including a Cadillac Escalade and Porsche Cayenne SUV. In a classic Ponzi scheme, Willy also used money from new investors to make quarterly payments to earlier investors, thereby concealing the fraudulent scheme by making earlier investors believe they were earning the promised rate of return. The government and Willy have agreed that victims have lost at least $4,192,929 as a result of the scheme.

The case against Willy is the result of an investigation by the Federal Bureau of Investigation and IRS-Criminal Investigation.

“Mr. Willy’s deceitful actions of defrauding numerous investors out of millions of dollars has caused him to face a lengthy prison sentence,” said Debra D. King, Special Agent in Charge, IRS-Criminal Investigation, Los Angeles Field Office.  “IRS special agents will continue to work with our fellow law enforcement partners and investigate those individuals who choose to prey on unwitting investors and launder funds for their own personal financial gain.”

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