as a result of the lies and the trickery
that went on for
eight years
lenders wired in nearly 400 million
dollars of loans to a i
over that period correct
that's the number i've been told yes
a high high-profile businesswoman has
been charged an alleged fraud scheme an
established leader
in san diego's business community gina
champion kane
local business leader gina champion kane
was sentenced to 15 years in prison
today gina champion kane 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 in the arena she was
working in why didn't she stop how can
you continue to know that you're
tricking people
and 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 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 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 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 the mid 80s uh san
diego was still relatively a
small military town there were some
bigger players but 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 gas lamp 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 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 and i 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 really used that as a calling card
for many years thereafter to
kind of suggest her status as a major
developer in the city where 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 the
headline who owns downtown
and on the cover was gina champion kane
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 this mid 70s he finally was
recognized in the san diego magazine and
that issue saw right next to it was
gina champion right
in in her full pr glory on the monopoly
board with bud uh 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
she really was a major figure in
downtown real estate
it wasn't the real estate that really
bothered me i thought she she was in her
lane so to speak it's when she started
branching off into these the patio
restaurants and the
the patio
auxiliary businesses walk into the patio
on goldfinch just a few minutes from
downtown san diego and you'll instantly
feel at home really a reflection of when
you come to my home to eat
this is the atmosphere you would
experience from the people i talk to and
work with
they couldn't put two and two together
to figure out how her
restaurant empire
was staying afloat so that was that was
always to me
uh kind of like you know when am i going
to wake up one day and the newspaper is
going to say
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 and created sort of a pet friendly
airbnb model 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 is late and you know where are
the napkins and all this kind of
nonsense well jim you you and i've known
each other a long time and and i have a
little problem that 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 a manager and
buyer i think she just came in and you
know met me in the shop
um and i just thought you know she was
awesome very charismatic very welcoming
i just kind of felt right at home you
know i always thought that these
investments she was taking were i'm like
i don't know how somebody can make this
percentage of a return
you know 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
uh and so you get a promissory note once
you
you know agree to doing this and it says
you know 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 twenty thousand do i invested
pretty
close to when you know 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 to
assistance
so it was sort of unclear to many at the
corporate office what all these people
were 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 at 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 genus 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 ten
percent let's say
and they only have to come up with a
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
dollars 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 in early 2019 there was a
very big
private equity fund and real estate
developer
that was considering investing about 100
million dollars 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
like
i don't remember the exact verbiage but
it was something like you know this
story has been released the sec is
investigating this
you know just don't 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 was
like i completely thought it 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 know 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 charger suite
tickets when we had 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
we should emphasize actually that many
investors put their trust more in
chicago title at least with that's what
they would say now than they did in gina
champion kane 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 it
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 men's 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 wants to explain the
whole situation and so i was like okay
i'm going to 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
went you know 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 you know
getting money and being able to hire
people and kind of building this empire
and she said she got too carried away
and it slipped way out of her hands she
was like promising me all my money back
she was promising me that i was going to
be part of a netflix documentary
and i still couldn't i was like
how is she going to have a netflix deal
she's going to 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 going to
take a couple of these companies public
and pay everybody back not that what i
was doing was right because it wasn't
her businesses went into receivership
and have been gradually
getting
liquidated sold off
chopped up and and sold for pieces
i still can't believe she pulled it off
i guess as long as she could um but it
is disappointing sorry
it is disappointing to like see somebody
that you loved and really looked up to
like do this
you know it's
i don't want to associate other people
with being liars and and deceding me you
know and it was really hard for me to
trust
anybody when i was applying for jobs
again because it's like 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
[Music]
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
[Music]
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
you