Ex-COO Pleads Guilty in $132M Fraud Scheme

Lara Coleman, the former Chief Operating Officer of Richmond-based Investment Properties of America, has entered a guilty plea in connection with a massive $132 million fraud scheme. The charges, brought by federal prosecutors, include conspiracy to commit mail and wire fraud, as well as making material false statements to federal investigators.

Coleman, a resident of Houston, pleaded guilty before U.S. District Judge Robert E. Payne for her role in the scheme, which targeted funds held in trust by 1031 Tax Group (1031TG), a qualified intermediary company connected to Investment Properties of America.

The plea agreement reveals that Coleman and her co-conspirators exploited the tax-deferral provisions under Section 1031 of the Internal Revenue Code. They misrepresented the purpose of client funds, falsely claiming they would be held in trust for 1031 exchanges. Instead, approximately $132 million was misappropriated to fund a lavish lifestyle and other business ventures.

Coleman admitted to lying about her involvement in the scheme during an investigation by Investment Properties of America’s internal attorneys in 2006. She now faces up to ten years in prison and a fine of $500,000 at sentencing on May 1, 2009. The feds also seek forfeiture of all funds and assets derived from the fraud.

Robert D. Field II and Richard E. Simring, former chief financial officer and chief legal officer of a holding company overseeing both Investment Properties of America and 1031TG, respectively, have also pleaded guilty to participating in the conspiracy. They too are scheduled for sentencing on May 1, 2009.

This case is part of an ongoing investigation led by Assistant U.S. Attorney Michael S. Dry and Trial Attorney Brigham Cannon, with support from the U.S. Postal Inspection Service, Internal Revenue Service, and FBI.

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