A San Diego businessman is accused of organizing and operating a sophisticated property scheme, the 10News I-Team reported.
Investors told the I-Team that John Scafani was looking to make himself money when he pitched them an investment idea that included pooling money to buy homes around California to fix up and then re-sell for a profit.
However, what Scafani did with the money, investors said, was something entirely different.
"I trusted him," said Carlsbad resident Ann Wentink.
For Wentink, a $300,000 investment meant more than money -- it was what her husband left her when he died, money for her twilight years.
"We had no children, and I have no one to take care of me. Who knows how long I'll live and what kind of medical care we'll need," said Wentink.
Attorney David Speckman said, "Preying upon people like this is not only immoral but it's illegal in my view, and I think it's a crime."
Speckman is suing Scafani on behalf of eight other San Diego investors who claimed that Scafani promised to flip the purchased homes but instead sold them to other investors over and over again. The investors also claimed Scafani took a cut from each deal.
The I-Team learned Scafani bought a house at 415 K Street in Bakersfield from an investor for $130,000 in 2006. Eleven months later, he sold it to another investor for $280,000.
"How did they get themselves in this circumstance?" asked 10News' Mitch Blacher.
"It has a lot to do with putting trust into a person," said Speckman.
The I-Team found that Scafani bought at least 45 homes in Bakersfield, Taft and Fresno. All were small homes in low-income neighborhoods.
In his latest deal, the I-Team learned that Scafani is telling and selling investors on an industrial property.
Scafani said the project is "fully embraced by Palm Springs and other government agencies."
However, the I-Team learned that was not the case and he does not own the property.
"So you're saying he tricks one person and gets 10 more?" asked Blacher.
"Often times because these things spread by word of mouth," said Speckman. "Mr. Scafani has the gift of gab. He drives a $70,000 car. He wears a $10,000 watch."
That ability sold a lot of people, the I-Team learned, and it's how a man who has filed for bankruptcy is now running a multimillion-dollar investment fund.
The I-Team found that Scafani prepared for the worst-case scenario. Buried on page 22 of his long contract every investor had to sign is a stipulation not to sue Scafani.
The I-Team visited Scafani's office off Waring Road, but the only answers came from a receptionist, who said she doesn't know how to get a hold of him.
"We're looking for John Scafani," said Blacher.
"I don't think he's in," said the receptionist.
"Do you know how we could get a hold of him or chat with him?"
The I-Team has yet to receive a response from Scafani.