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Former real estate firm CEO, 64, pleads guilty to wire fraud over $26million Ponzi scheme in which he used embezzled money to buy Malibu vacation home, luxury cars and coin collection

 A former California real estate firm CEO has pleaded guilty to federal wire fraud charges in connection to a $26million Ponzi scheme, in which he used embezzled money to buy homes, luxury cars and to pay private school tuition.

Lewis Wallach, 64, on Wednesday entered guilty pleas to one count each of felony fraud and conspiracy to commit fraud for his role in a large-scale scheme involving the Marin County real estate company Professional Financial Investors (PFI), and a related entity, Professional Investors Security Fund (PISF), according to the US Attorney's Office.  

Wallach was charged on September 29 with allegations that he and PFI’s now-deceased founder, Kenneth Casey, ran the company as a Ponzi scheme for five years and swindled some 1,300 investors out of their money.

California businessman Lewis Wallach, 64, has pleaded guilty to wire fraud and conspiracy to commit fraud in connection to a $26million Ponzi scheme, in which he used swindled money to buy properties, including this Malibu home that one belonged to Judy Garland (pictured)

California businessman Lewis Wallach, 64, has pleaded guilty to wire fraud and conspiracy to commit fraud in connection to a $26million Ponzi scheme, in which he used swindled money to buy properties, including this Malibu home that one belonged to Judy Garland (pictured) 

Casey launched PFI in Novato, California, in the 1980s and hired Wallach in 1990. The founder died of a heart attack in May, reported Marin Independent Journal.

Wallach served as PFI's president and CEO from 1998 until this summer.

According to his plea agreement, Wallach admitted that he and Casey knew for many years that the company was not profitable, and that it had to raise new investments to pay existing investors, effectively making the enterprise a Ponzi scheme. 

Wallach admitted that he lied to investors, including telling them that PFI had enough income on its residential and commercial properties to allow it to survive and expand during the economic downturn caused by the COVID-19 pandemic, and conspired with the company's founder to draw new investments under false pretenses.  

Wallach served as president and CEO of Professional Financial Investors, based out of Novato, California, from 1998 until this summer

Wallach served as president and CEO of Professional Financial Investors, based out of Novato, California, from 1998 until this summer

Kenneth Casey (pictured) founded PFI in the 1980s and hired Wallach in 1990. He died of a heart attack in May 2020

Kenneth Casey (pictured) founded PFI in the 1980s and hired Wallach in 1990. He died of a heart attack in May 2020 

He also admitted that he engaged in a years-long scheme to embezzle funds from PFI and PISF, in which he took more than $26million from 2015 until June 2020, including money he used to buy a Malibu vacation home that was previously owned by Hollywood legend Judy Garland, luxury cars and coin collections.

Wallach also used the misbegotten funds to pay private school tuition and credit card bills. 

Under the plea deal, Wallach will be required to pay $26,7million in restitution and to help prosecutors with identifying and transferring any assets related to his crimes. 

Each of the charges against Wallach carries a sentence of up to 20 years in prison, followed by three years of supervised release, and a $250,000 fine.    

The US Attorney's Office is recommending that Wallach be sentenced to eight years in prison for his cooperation. 

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