John Sheehan (aka "The King of Bling" in the real estate market) was sentenced in federal court on Monday for using the Internet to promote a real estate scheme in which investors lost more than $1 million. Mr. Sheehan used his businesses, John Michael Investment (JMI) and 3MOM, to defraud investors who paid to purchase and rehabilitate residential properties from June 1, 2005, through June 30, 2006. On his website he solicited investments to purchase and rehab properties, which will be sold and profits split with the investors. He would promise the investors a return between 10 to 18% per year.
Eventhough investors were promised that they were sole-investors on each property, The King of Bling would use funds from several investors on the same property. In other cases he would not even purchase the properties. In other cases, he would pool funds from several investors and purchase properties for values substantially less that the funds raised for the property, like in one case were he raised approximately $83,000 for a property he purchase for $19,000 and sold for $70,000.
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