A 30-year-old California accountant who persuaded people to invest millions of dollars in plans to build small homes on residential properties has been sentenced to 63 months in federal prison after admitting that he used their money for risky financial trading instead.
Ethan Joseph Sanchez, from San Diego, took more than $8.2 million from investors by promising to use their funds for real estate projects, including the construction of accessory dwelling units (ADUs). However, no such homes were built, and the money was lost through risky day trading, according to the US Department of Justice.
US District Judge Robert S Huie sentenced Sanchez on Friday and ordered him to forfeit more than $8.2 million. He was also directed to pay restitution to the victims, although the Justice Department's announcement did not specify a separate restitution amount. Sanchez was a Certified Public Accountant (CPA) when he carried out the scheme.
According to his plea agreement, he repeatedly gave investors false information about how their money would be used. He convinced them to lend money to him and his company, BSC Equity Ventures, LLC, by presenting the investments as opportunities to finance real estate transactions.
The investors were told that their money would help build additional homes on specified properties and that they would receive their original investment back along with interest. Instead, Sanchez put the funds into risky day trades. The Justice Department said he rarely returned money to investors and did not finance any of the promised real estate projects.
How investment scheme worked
The investment opportunity presented by Sanchez involved accessory dwelling units, commonly known as ADUs. These are additional residential units built on properties that already have a main home. They are sometimes described as backyard homes.
According to prosecutors, Sanchez used plans involving such units to convince people that their money would support property development. His promises were not limited to construction. He also claimed that investors' funds would be used for other real estate transactions.
The arrangement involved people lending money directly to Sanchez or his business. In return, he promised to repay the amount they had provided, along with interest, within the agreed period. However, the money did not go towards the purposes he described.
Sanchez admitted that he neither funded real estate transactions nor constructed any of the ADUs he had promised investors. Instead, he used the money for day trading, a form of financial trading involving buying and selling investments over short periods. The trades were risky, and Sanchez lost the investors' money. The scheme ultimately resulted in losses exceeding $8.2 million.
Victims describe the impact of loss
Several victims addressed the court during Sanchez's sentencing hearing, describing how the fraud had affected their lives. One victim spoke about the suffering caused by Sanchez and expressed relief that investigators had uncovered the scheme. “He was caught by the FBI, thank God,” the victim told the court, as quoted by the Justice Department.
Judge Huie also spoke about the damage caused by Sanchez's actions. He described the scheme as “aggravated and reprehensible” and pointed out that Sanchez had used existing investors to attract more people into the arrangement. In some cases, those investors persuaded their own family members to participate.
The judge described the harm suffered by the victims as “almost unimaginable”. He said the consequences extended beyond the money they had lost, affecting people who had worked to earn and save those funds. The court heard that the financial losses had caused serious personal suffering.
Judge Huie described the damage as moving and heartbreaking, making clear that the consequences of the fraud were not limited to the amount stolen.
Court orders repayment and prison sentence
Following the sentencing hearing, US Attorney Adam Gordon said Sanchez had taken advantage of people who trusted him with their savings. “Ethan Sanchez exploited the trust of hardworking people and stole their savings through lies and fabricated investments. This sentence reflects the profound harm he caused,” Gordon said.
The federal court imposed a prison term of 63 months, equivalent to five years and three months. Sanchez was also ordered to forfeit more than $8.2 million and pay restitution to those affected. The case involved wire fraud and money laundering charges. The Justice Department listed a maximum possible prison sentence of 20 years for each offence, along with financial penalties.
