$132M Trust Fund Scheme Lands Ex-COO 10 Years

RICHMOND, VA – Lara Coleman, 40, formerly the Chief Operating Officer of Investment Properties of America, has confessed to her role in a brazen $132 million scheme to pilfer funds entrusted to the 1031 Tax Group (1031TG). Coleman pleaded guilty in federal court to conspiracy to commit mail and wire fraud, and for lying to federal investigators – a desperate attempt to cover up the theft that fueled a lavish lifestyle for the owner of both companies.

The 1031TG, a qualified intermediary, was supposed to safeguard client funds during 1031 exchanges – a legal process allowing investors to defer capital gains taxes when reinvesting in similar properties. Instead, Coleman and her co-conspirators treated the trust like a personal piggy bank. They weren’t facilitating exchanges; they were systematically looting client accounts, diverting the money to line the pockets of the owner and prop up a network of failing businesses.

Federal prosecutors revealed the scheme wasn’t just about enriching the owner. The stolen $132 million was used to fund a decadent lifestyle, pay operating expenses for various shell companies, and even invest in more qualified intermediary companies – a cynical attempt to expand the pool of potential victims. Coleman also admitted to lying about the extent of the misappropriation when questioned by investigators back in 2006, digging herself deeper into a criminal hole.

Coleman’s plea agreement sets the stage for a 10-year prison sentence and a $500,000 fine. But the feds aren’t stopping there. They’re seeking forfeiture of all of Coleman’s assets derived from the stolen funds, aiming to claw back at least a portion of the $132 million. This case highlights the vulnerability of trust funds and the lengths to which some will go to exploit the system.

This isn’t a solo act. Robert D. Field II, the former Chief Financial Officer, and Richard E. Simring, the former Chief Legal Officer of a holding company overseeing both Investment Properties of America and 1031TG, have also pleaded guilty to participating in the conspiracy. Both are scheduled to be sentenced alongside Coleman on May 1, 2009. The investigation, led by the U.S. Postal Inspection Service, IRS, and FBI, is ongoing, suggesting more heads may roll.

Assistant U.S. Attorney Michael S. Dry and Trial Attorney Brigham Cannon are prosecuting the case, determined to bring all those responsible for this massive financial betrayal to account. The Grimy Times will continue to follow this case and report on any further developments as the investigation unfolds, exposing the rot beneath the surface of seemingly legitimate investment schemes.