Seattle/ Real Estate & Development
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Published on March 01, 2024
Bellevue Real Estate Firm iCap Suspected of Running a Ponzi Scheme, Owes $250M to InvestorsSource: Google Street View

A Bellevue real estate investment firm is in the hot seat as Paladin, the restructuring company now leading the firm, claims in recent bankruptcy filings that the company was running a Ponzi scheme. The firm, iCap, founded in 2011 with the intent to invest in projects around Seattle, started facing heat last year after investors took them to court due to repayment issues. Those bankruptcy documents filed last week have Paladin alongside investor attorneys calling for iCap to be recognized by the court as a Ponzi scheme, as reported by The Seattle Times.

“The conclusion is based on overwhelming evidence,” Lance Miller, Chief Restructuring Officer, said in a statement to The Seattle Times. Paladin's assertion aims to quickly expedite the recovery process for the investors. The turmoil started when iCap began to endlessly extend the repayment deadlines and stopped the monthly interest payments that sparked the lawsuits. Miller's statement highlights the need to have the company’s operations legally acknowledged as fraudulent to aid the recovery process.

The bankruptcy process has uncovered that iCap owes a staggering $250 million to approximately 1,800 investors, with many being Chinese citizens and Chinese Americans. Court filings detail that most of iCap's income in the past five years came from roping in new investors, rather than actual profits from its supposed real estate projects, as reported by BNN Breaking News. With a return of only $1.4 million on the $103 million invested in property over the years, the financial situation at iCap points to Ponzi scheme characteristics rather than legitimate business outcomes.

The collapse of iCap has left investors like Lilian Tan, who moved to Washington state in 2015, grappling with major financial losses. Tan, who invested a cool $1 million in hopes of funding her children's college education, now faces an uncertain financial future. "Mr. Christensen strongly disputes the allegation that iCap operated as a Ponzi scheme," Christensen’s attorneys said to The Seattle Times, challenging the portrayal of the situation laid out in the restructuring company's claims. Chris Christensen, founder and former CEO who stepped down last September, has yet to present his counter-evidence in court.

As iCap's legal woes intensify, the outcome for the hundreds of investors who were promised secure investments in Seattle's booming real estate market remains up in the air. The bankruptcy process, coupled with ongoing litigation, aims to discern whether investors can hope to regain even a portion of their funds, according to details found in The Columbian. With legal actions potentially mounting against Christensen and related entities like Umpqua Bank and the buyers of a Renton apartment building that had ties to iCap, the road to restitution is fraught - and justice is still far from certain.

Seattle-Real Estate & Development