Ex-Business Partners Facing Fraud Charges

FORT PIERCE ˜ Leonard Bogdan was either the head of a complicated scheme to fleece investors out of millions or a poor manager who tried but couldn't revive a failing business venture.

Those two very different versions of Bogdan were presented to jurors during opening statements Tuesday as his federal fraud trial began.

Bogdan, 55, stands accused alongside his former business partner, John Brant, 64. Both men are charged with multiple counts of mail fraud and a single charge of conspiracy to commit mail fraud in connection with the operation of Bogdan Financial in Port St. Lucie and One Source Financial in Stuart. Bogdan also faces charges of money laundering.

Bogdan and Brant began recruiting investors in 1998, promising a return of at least 10 percent and the money would be secured with real estate ˜ a recorded first lien mortgage on property, according to Assistant U.S. Attorney Diana Acosta.

 

The idea was to buy depressed homes, refurbish them and sell them again within three to six months, returning a healthy profit to investors. The problem was many of the investments were not secured as promised and some properties had multiple investors whose money was worth far more than the amount of the homes the investments were backed against, she said.

Acosta said Bogdan diverted money for other uses, including building a $600,000 home for himself in Seminole County and offering unsecured personal and business loans. Ultimately, the business ended up paying old customers with money from new investors.

"To keep the business afloat they knew they needed to pay the investors their interest payment," Acosta said. "There was no way they were going to be able to keep up."

Defense attorney Ronald Chapman, who represents Bogdan, said his client and Brant took over One Source Financial from another owner for nothing in 1997 because the business was failing and about to declare bankruptcy. Bogdan did what he did best ˜ raise money ˜ and ended up raising $17.5 million over the course of the venture, using the funds for legitimate business investments. Chapman blamed former secretary Vivian Castignani, who took a plea deal from prosecutors, with causing problems within the business that Bogdan was not aware of. A state investigation in 2001 caused a "run on the bank" among investors and furthered problems, he said.

"The evidence is going to show bad management on the part of Mr. Bogdan," he said. "It's going to show absolutely no criminal intent."

Defense attorney Ian Goldstein, who represents Brant, said his client "had nothing to do with soliciting investors or taking investors' money."

Brant worked in the Stuart office, finding and fixing up properties, and assumed Bogdan and others were taking care of business in Port St. Lucie.

The case is expected to take about four weeks.

WHAT HAPPENED IN COURT

Tuesday: A jury was seated in the trial of Leonard Bogdan and John Brant and opening statements were delivered. Both are accused of operating a scheme that defrauded hundreds of local investors by promising stable returns on investments and instead using new investors' money to pay older customers.

Today: The first witnesses for the prosecution will begin testifying. The case is expected to last about four weeks.

 

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