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Friday, March 24, 2006

USC Marshall School of Business students swindled

I'm still shaking my head after reading this article.

So Barry Landreth, a USC Marshall part-time lecturer in real estate finance and development talks up a storm in class about how he purchased land in Las Vegas and Chicago and that reselling the properties would bring returns of 190 percent within 30 to 45 days. The guy never owned the land!

Not only does this guy swindle people that are working for him, but he takes the money of a handful of USC Marshall students who wanted to make a quick buck.

Absolutely scandalous.

Authorities said Landreth's business was actually a Ponzi scheme, in which any money paid to investors comes from money put in by other investors. They said many of those who invested were USC business students who also worked briefly for Landreth but did not earn the salaries they were promised.

Source article


Anonymous Anonymous said...

more details on the arrest:,1,925958.story?coll=la-headlines-pe-california

2:23 AM  
Blogger Dave for MBA said...

It's really weird how Dean Gupta left in Jan-Feb time frame and Dean Gilligan took over in Feb. And this date coincides with when the scandal started in Jan as well. The timing of this couldn't have been any worse.

10:40 AM  
Anonymous Anonymous said...

great detail article on Daily Trojan (USC Student Newspaper)
FBI report details web of lies
Former USC adjunct professor Barry Landreth claimed to have properties in Chicago and Las Vegas for investment.
Ashley Archibald
Posted: 3/29/06
Former USC adjunct professor Barry Landreth was arrested Friday by the FBI after allegedly embezzling $1.5 million in a real estate investment scam. Some victims were USC students.

Landreth offered investment opportunities in Chicago and Las Vegas through Webster Realty Investors Inc., a group for which he is both founder and chief executive officer, according to the FBI's case affidavit.

The projects, called Discovery Opportunity Chicago and Discovery Opportunity Las Vegas, were hyped to investors as high-yield investment opportunities with potential returns of 190 percent within 30 to 45 days, according to the affidavit.

No investors ever received the profits of their investment, and only a few "persistent" investors were able to recover their principal investment.

The biggest individual loss was $700,000, FBI spokeswoman Laura Eimiller said.

The Chicago project was represented to both investors and employees of Webster Realty as a "$50 million real estate development project in downtown Chicago," according to the affidavit.

Landreth claimed to have sold the Chicago property to the Cendant Corp., a real estate and travel firm, rather than develop it.

Cendant claims in the affidavit to have no record of any dealings with Landreth or the DO projects.

When profits failed to materialize for the supposed sale of the property, Landreth reportedly blamed the delays on "the USC Credit Union, Paul Hastings law firm, an in-house accountant, third-party vendors and an escrow company," according to the affidavit.

The Las Vegas project was purported to be a development project for 130 acres of land near McCarran International Airport in Las Vegas. Landreth raised $780,000 for the project, though the land was not for sale, said owner Theodore Lee in the affidavit.

Landreth maintained his con by telling investors that he had dealings with various financial and law firms, falsely claiming to be involved with Cendant, Chicago Title Insurance Co. and Paul Hastings, according to the affidavit.

He also assumed the identity of Christine Shipp, his supposed attorney of seven years, in his dealings with investors. It has since been verified in the report that Christine Shipp does not exist.

Of the $1,473,000 that Landreth allegedly stole, $718,000 was transferred to Landreth's USC Credit Union account. Another $22,000 was deposited into Merrill Lynch accounts. The remainder was spent on Webster employee salaries and refunding principal investors, according to the affidavit.

Landreth spent embezzled funds on a 2005 Cadillac Escalade, show horses stabled at the Coto Valley Equestrian Center in Trabuco Canyon, Calif., and two racehorses in Oklahoma, in addition to the various financial accounts, Eimiller said.

The show horses alone cost $500,000, Eimiller said.

No money was ever used for the original purpose of land development.

Landreth employed several USC students from his business classes. Though some were promised salaries of $100,000 per year, eventually paychecks stopped coming, the students said in the affidavit.

They were also told they had health insurance benefits that never materialized.

Webster Realty was operated out of the homes of Landreth and his employees. Though he claimed to have leased office space, Landreth told employees that "he never occupied the office space because he wanted to be closer to his corporate jet in Orange County," according to the affidavit.

During the course of FBI agent Brad Howard's investigations of Webster Realty, Howard discovered that there are no earnings records for the company with the California Employment Development Department other than those from Landreth's legitimate income from USC.

"Based on my experience investigating fraud cases, I would expect that if Webster were a legitimate business, there would be records at EDD demonstrating Landreth's or other employees' wage information from Webster during this time period," Howard wrote in the affidavit.

"Landreth nor Webster had any significant assets other than income from the victims," according to the affidavit. At one point, there was "little more than $200 in the Webster account."

In a tape-recorded conversation with an employee and former student identified as Greg S., Landreth claimed that the Webster Realty Investors Inc. was worth $3 billion.

This is not the first time Landreth's honesty has been called into question.

Landreth was involved in the planning of the Myrtle Beach Pavilion Amusement Park from May 2004 until Jan. 2005, when Burroughs and Chapin Company, Inc. removed him from the project after Landreth was accused of questionable business practices, according to Knight Ridder.

To secure the position, Landreth faked letters of reference and earning statements. It was also discovered that his Los Angeles-based company is registered offshore in Bermuda, according to the article.

Rumors of bad checks and undisclosed investors also followed Landreth into the Myrtle Beach project, although none of this was revealed in his original background check by Dave Sebok, executive director of Myrtle Beach's Downtown Redevelopment Corp.

At the time of the Myrtle Beach project, Landreth was employed by USC as an adjunct professor and had been conducting his DO Las Vegas business since Jan. 2004.

12:17 PM  

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