As a result of the lies and the trickery that
went on for eight years, lenders wired in nearly $400 million of loans to ANI over that period, correct? That's the number I've been told, yes. A high profile businesswoman
has been charged in an alleged fraud scheme. An established leader in San Diego's business
community, Gina Champion-Cain. Local business leader Gina
Champion-Cain was sentenced to 15 years in prison today. Gina Champion-Cain was very well known amongst people who were in
real estate in San Diego, leasing and marketing,
developers, property managers, she always had a huge personality. She was incredibly
charismatic, very magnetic, very outgoing, and in a
world that was really kind of in many ways, a macho boys
club, she could really hang. She liked sports. She liked hanging out at the bar. She liked to play poker and smoke cigars. She liked going to Las Vegas. I thought she was very affable, knowledgeable in the real
estate area no question, definitely a hard charger, qualified in the arena she was working in. Why didn't she stop? How can you continue to know that you're tricking people and think that you're gonna be able to give them their money back. It's like she treated me
like a daughter or a niece. And so it was just so disappointing to see this woman that I
respected so much do this. Despite its sunny reputation,
San Diego has been home to more than its share
of financial scandals. In the early 70s, the mayor and much of the city council were indicted for fixing taxi industry prices. Also in the 1970s, a local
businessman named Conrad Smith, who was known as Mr. San Diego, presided over what was then
the largest bank failure in history. Since at least the 1990s, the
city was underfunding pensions and using the leftover money to subsidize projects like a
new baseball park downtown, the same money was used to help fund the 1996
Republican National Convention. Our Republican hearts and minds are in the hospitable city of San Diego. The mismanagement of pensions was actually what earned San Diego, the
title of "Enron by the Sea." This world of rapid downtown
development is the backdrop where Gina made her real estate career. San Diego, the most attractive point for investment and speculation
on the Pacific Coast. I got here in the mid 80s, San Diego was still relatively
a small military town. There were some bigger players, but actually very easy to be
a big fish in a small pond at that time. There weren't a lot of
institutional investors. Gina knew where to be to rub elbows with the
people that she needed to. I met her, I believe sometime
not long after I got here in the late 80s. And she was actually consulting on some real estate projects
in the Gaslamp Quarter. The Gaslamp itself was designated as a national historic district. So there was some buzz and there was still a
lot of undesirable uses in terms of porn shops, tattoo parlors. Our paths never crossed. We never did a deal together. We were very friendly socially. She had started her own company which was called American
National Investments, the name of which suggests something of her ambition, I think. After she started going into hospitality following the recession,
ANI grew very quickly, they went from having just
a handful of employees, really in 2011 and 2012, to having hundreds by
let's say 2015, 2016. She had an office above a nightclub in downtown San Diego
in what was then a sort of borderline neighborhood
called the Gaslamp. She'd really used that as a calling card for many years thereafter to
kind of suggest her status as a major developer in the city. She started appearing
on all kinds of lists, 50 People To Watch, 40 Under 40, I think at some point she even appeared on the cover of San Diego Pets Magazine. In 2003, San Diego Magazine ran a cover with a headline "Who Owns Downtown?" And on the cover was Gina
Champion-Cain standing beside a much older man
by the name of Bud Fisher. My partner, Bud Fisher, who'd been active in the
real estate business, since the mid 70s, he
finally was recognized in the San Diego Magazine in that issue, saw right next to it was Gina Champion, right in her full PR glory
on the Monopoly board with Bud. At the time I wasn't
aware of any real estate that Gina owned. She had at a maximum, maybe
a couple of small stakes in relatively small pieces
of property downtown at that point. For those who were just kind of casually reading San Diego Magazine, it very likely seemed to them that she really was a major
figure in downtown real estate. It wasn't the real estate
that really bothered me. I thought she was in
her lane, so to speak, it's when she started branching off into these patio restaurants and the patio auxiliary businesses. Walk into the patio on Gold Finch, just a few minutes from downtown San Diego and you'll instantly feel at home. It's really a reflection
of when you come to my home to eat, this is the atmosphere
you would experience. From the people I talked
to and worked with, they couldn't put two and two together to figure out how her restaurant
empire was staying afloat. So that was always to me, kind of like, when am I gonna wake up one day and the newspaper's
gonna give me the answer to that question, I would say. Gina pivoted from corporate
real estate development to more of a focus on hospitality. Simultaneously, she was going into short term vacation rentals. She bought a number of beachfront mansions in the Mission Beach
neighborhood of San Diego and created sort of a pet
friendly Airbnb model. I mean, you could have got an operator. You could have got somebody
to run the business. I'm curious why you
decided to run the business where the busboy's late
and where are the napkins and all this kind of nonsense? Well, Jim, you and I have
known each other a long time and I have a little problem and
I'm kind of a control freak. And I don't like just giving up things. She also opened a couple of boutiques, at least one of which was
in Mission Beach as well. Those were called Love Surf. I met her within my
first week of being here. I pretty much started at
the boutique right away. I was the manager and buyer. I think she just came in
and met me in the shop. And I just thought she was awesome, very charismatic, very welcoming. I just kind of felt right at home. I always thought that these
investments she was taking were, I don't know how somebody
can make this percentage of a return but I trusted it because a lot of people
that were very high up and very well respected trusted her. Every six months, you were
supposed to get 15% return. And so you get a promissory
note once you agree to doing this. And it says how much you're investing. It agrees to give you
back your full return if you decide to pull out. And I had inherited some money and I'm like, okay, I should
probably take the opportunity to do this. I invested 20,000. I invested pretty close to when this whole scheme broke out. So I never got the chance to roll over. In general, her businesses really
tended to hemorrhage money. Gina had an assistant, unsurprisingly, but apparently at some point
Gina's assistant was able to hire an assistant of her own. And that person, Gina's
assistant's assistant, then got two assistants. So it was sort of unclear to
many at the corporate office what all these people we're
doing with their time. in the process of opening
her first restaurant, Gina learned a little bit about the way liquor
licensing works in California. California liquor licenses
can be quite expensive, up to hundreds of thousands
of dollars in some cases. A lot of would-be restaurant owners or even current restaurant owners might have trouble coming
up with that much capital on short notice. It occurred to Gina that there
might be a viable service in making high interest short term loans to folks who needed to deposit these funds into escrow accounts. She approached a friend of
hers named Kim Peterson, who was a prominent investor and real estate developer himself in San Diego and
explained the idea to him. And Peterson came on
board first as an investor and it appeared to him that the loans he was making
functioned as advertised and they were paying off. Peterson proposed to
take a more active role in bringing on additional
investors himself. And from there, the
platform really took off as Peterson was able to interest a number of institutional investors,
banks, and hedge funds, and so forth to really increase the amount of capital going into Gina's platform. A very substantial amount of capital came from institutional investors,
notably a hedge fund based in Austin called Ovation as
well as Bank of California. The problem with this
premise is that in fact, the Liquor Licensing
Board only requires them to deposit five or 10% let's say, and they only have to come
up with the full amount when they actually
acquire the full license or the restaurant that the
license is coming with. There is no strong demand for
short term high interest loans to cover these escrow costs. As far as we can tell, there were no loans ever actually made through this platform. A little bit under $400 million
are thought to have flowed through the account. Early investors certainly
were making money. I don't think it was
about not going to prison. I think it was to keep making people a lot of money, which I was doing. In early 2019, there was a
very big private equity fund and real estate developer
that was considering investing about $100 million in the fund. But before they pulled the trigger, they wanted an expert read. And so they hired a guy
named Michael Brewer, who is one of the foremost experts on California liquor
licensing in the state to design sort of a due
diligence process for them. And in the course of that due diligence, Brewer and his client concluded that Gina's loan program
wasn't actually funding any liquor license escrows and that the most likely explanation for its success was that
it was a Ponzi Scheme. All of a sudden we just got an email from our HR department. I don't remember the exact verbiage but it was something like
this story has been released. The SEC is investigating this, just please don't talk to any press. The Securities and Exchange Commission says the company defrauded dozens of retail investors out of
hundreds of millions of dollars. I completely thought I
was a misunderstanding. I was like, there's no way
that this could be happening. I thought I was gonna have my job forever. I loved that company. And it's kind of like the denial phase. You think that it can't be true. Somebody I love and I
respect, they can't do this to people that they are supposed to love. Part of the success of the fund I think, was Gina's very good standing in the business community in San Diego. Part of it was also Kim
Peterson's very good standing, people really respected Kim Peterson. They thought of him as an honest guy and as a very careful investor. Gina had very close relationships with a handful of
employees at Chicago Title, which was the company
overseeing the escrow accounts for her. And she maintained those relationships in part by giving very nice gifts. Free baseball tickets,
Chargers suite tickets, when the Chargers were still in San Diego, Petco Park, we had corporate suites there. I gave lots of bottles
of alcohol, champagne, jewelry, cash, lots of free
food at my restaurants. In a message that was cited
in a number of lawsuits, Gina said to two Chicago employees, "If anyone calls asking
about escrow accounts and alcohol licenses, blah, blah, blah, just tell them show me
the money, ha ha ha ha." We should emphasize actually, that many investors put their
trust more in Chicago Title, at least that's what they would say now, than they did in Gina Champion-Cain. Chicago title is one of the largest title insurance
companies in the country. Chicago Title as the
keeper of the escrows, was not supposed to allow money in or out of any account for any purpose other than
the account holder specified. In retrospect, Gina's Ponzi Scheme might have
been quite easy to uncover. All it might have taken was a phone call to one or two people who were supposedly financing their liquor
license escrow accounts with her fund to find out
that in fact they were not. When we think of the largest
fraudsters in history, it's mens' names that come to mind, most notably Bernie
Madoff, but Gina is thought to be the most prolific female
Ponzi Schemer in history. a very substantial amount of capital came from
institutional investors but there were a lot of people
that Gina knew personally who put in money as well. She reached out to me through text message and asked if I wanted to come over. She said she wanted to
explain the whole situation. And so I was like, okay, I'm
gonna give her the benefit of the doubt because it's like, okay, I still don't have all the facts. And then she sat me down. We shared some wine and
she told me the story from when she started
until she got caught. And she said that it
started off legitimately. And then she just liked this feeling of getting money and
being able to hire people and building this empire. And she said she got too carried away and it slipped way out of her hands. She was promising me all my money back. She was promising me
that I was gonna be part of a Netflix documentary. And still I was like, how is she gonna have a Netflix deal? She's gonna be in prison. Gina lived a very nice lifestyle. She had property in Carmel, California. She had property out in Palm Desert. She had a very nice home in Mission Hills, but most of the money
does seem to have gone to the businesses. Well, I truly believed I was gonna take a couple these companies public and pay everybody back. Not that what I was doing
was right, 'cause it wasn't. Her businesses went into receivership and have been gradually
getting liquidated, sold off, chopped up, and sold for pieces. I still can't believe she
pulled it off, I guess, as long as she could,
but it is disappointing. Sorry, it is disappointing to see somebody that you loved and really
looked up to do this. And I don't wanna associate other people with being liars and deceiving me. And it was really hard
for me to trust anybody when I was applying for jobs again because every company
I looked at I'm like, well how do you get your money? How do you operate this business? We know that the Department of Justice is actively investigating a number of former Chicago Title employees. There are also a number
of ongoing civil suits against Chicago Title. She pled guilty and was
ultimately sentenced to 15 years in Federal prison. She is currently in a
minimum security institution in Northern California called FCI Dublin. I am living my life as a
very good prisoner here at Dublin. I teach classes, I mentor people, and I'm a very strong member
of this community here.
