LAS VEGAS—Joseph D. Milanowski, 48, former officer of the real estate development investment company USA Capital, was sentenced today by Chief U.S. District Judge Roger L. Hunt to 12 years in prison and ordered to pay $86.9 million in restitution to over 1,000 victims for his guilty plea to one count of wire fraud, announced Daniel G. Bogden, U.S. Attorney for the District of Nevada.

Milanowski’s sentence included enhancements because the loss was greater than $50 million, and because the defendant abused a position of private trust to facilitate the commission of the offense. Milanowski was allowed to self-report to federal prison by August 6, 2010, at noon, but must continue to cooperate with the government and U.S. Bankruptcy trustees during that period of release.

Milanowski was the President and de facto Chief Operating Officer of USA Commercial Mortgage Company, which did business as USA Capital from 1998 through April 2006. USA Capital raised money from investors to loan to developers for the construction of real estate. In May 2000, USA Capital created the Diversified Fund to make secured loans to the developers and to pay the investors interest on the loans. Milanowski and others represented to investors that all of the loans made by the Diversified Fund would be secured by first deeds of trust. Investors were also advised that no loans would be made to company insiders, that no loans larger than $20 million would be made once the Diversified Fund reached a certain value, that no loan would exceed 15 percent of the value of the Fund, and that the Fund would not loan more than 25 percent of its funds to a single borrower.

On about April 15, 2002, Milanowski created a loan known as the “10-90 Loan” which he used to fund private developments and investment projects for himself and other company insiders and affiliates. From about March 27, 2003, to about November 12, 2004, Milanowski transferred approximately $22 million to 10-90 Inc. and to another entity he controlled to fund his own development projects. Milanowski and others concealed the existence of the 10-90 Loan from investors until September 30, 2005, when Milanowski included the 10-90 Loan on a list of the Diversified Fund’s loan portfolio in which he claimed that the 10-90 Loan was secured by three master-planned communities in Southern California when he knew that the loan was not secured by three communities. When USA Capital Mortgage Company and the Diversified Fund filed for bankruptcy on April 13, 2006, Milanowski had caused the Diversified Fund to attribute $55.9 million of its principal to the 10-90 Loan. The investigation of USA Capital is ongoing.

The case was investigated by the FBI, and prosecuted by Assistant United States Attorneys Daniel R. Schiess and Roger Yang.

This prosecution is sponsored by President Barack Obama’s Financial Fraud Enforcement Task Force, http://www.justice.gov/opa/pr/2009/November/09-opa-1243.html. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

Jamal Eljwaidi, also known as Jean Marc Eljwaidi, was arrested July 29, 2009 on six counts of Financial Elder Exploitation, a felony. Eljwaidi allegedly perpetrated a ponzi scheme scamming millions of dollars from dozens of victims worldwide by taking investors’ money for a real estate development and then spent the investments on himself.

He was booked into the Clark County Detention Center in Las Vegas, NV and posted bail at $2,030,000 million. A Justice Court felony arraignment has been scheduled for 8 a.m. on Jan. 8, 2010.

The recent victims say they invested with the real estate developer from 2005 through 2008. As more victims continue to come forward in the investigation real estate scam, Eljwaidi could face new charges including securities fraud, sale of unregistered securities, obtaining money under false pretenses and racketeering.

According to a criminal complaint, Eljwaidi scammed a male senior citizen who suffers from mental incapacitation out of $400,000 by promising to make the man an equal business partner.

Instead, Eljwaidi used up to $600,000, including the man’s money, to live a lavish lifestyle while leaving the elderly man destitute.

Investigators from the Nevada Secretary of State Ross Miller’s office said Eljwaidi and his employees called potential investors between March 2005 and March 2007 and persuaded them to invest in short-term loans for a shopping center project in the Las Vegas Valley in exchange for high interest payments.

The shopping center, hotel, theater and restaurant complex was supposed to be completed in October 2009, but, to date, “It is an empty desert lot,” Miller said.

Eljwaidi initially was sought for elder exploitation in December 2004. However, since his arrest in July, 2009 five more possible victims have come forward.

Records indicate Eljwaidi filed for Chapter 11 bankruptcy shortly before his arrest. The bankruptcy filing listed $10 million to $50 million in both estimated assets and estimated liabilities.

Anyone who invested with Eljwaidi or his companies, Babuski LLC and JKG Development, or anyone who believes they may have been a victim, is asked to call the Secretary of State’s Office in Las Vegas at (702) 486-2440, or (775) 688-1855 in Carson City.

Financial Exploitation of the Elderly is a felony.

It occurs when a relative or caregiver of an elderly person steals, withholds, or otherwise misuses that elderly person’s money, property, or valuables for personal advantage or profit.

There are many methods that relatives and caregivers may use to exploit the elderly. These may include:

• Taking the victim’s money, property, or valuables

• Borrowing money and not paying it back

• Giving away the victim’s possessions without permission

• Misusing ATM or credit cards

• Forcing the victim to part with resources or property