Stephen Gibbons, Assistant District Attorney CONTACT PERSON:
Paul Colin, Deputy District Attorney
(408) 792-2576 For release on February 3, 2005 FATHER-SON TEAM TO BE SENTENCED FOR RUNNING $73.6 MILLION FRAUDULENT INVESTMENT SCHEME AGAINST HUNDREDS OF ELDERS NATIONWIDE Tomorrow, February 4, 2005, James Edwards, 73, and his son, David Edwards, 49, are scheduled to be sentenced for their roles in running a fraudulent nationwide $73.6 million investment scheme. They were convicted by a jury on November 17, 2004, of 16 counts of fraudulently selling or offering an investment security, 6 counts of first-degree burglary, and one count of conspiracy. The sentencing by Judge Rene Navarro is scheduled at 9:00 in Department 39 of the Hall of Justice. Based in Tacoma, Washington, the Edwards ran Resource Development International, their version of one of the nation's "Top Ten Scams" – more generally known as a "Prime Bank Note" fraud – and the men's third such activity since 1996. The men oversaw and paid commissions to a sales force of "investment advisors," usually insurance agents or "living trust" salesmen, who persuaded over 1,000 clients to invest between $10,000 to $500,000. The victims – including approximately 20 in Santa Clara County and Northern California – were promised that their money would be protected in certificates of deposits with so-called "prime" banks but could earn profits of 4% each month because the money was being added to a large "pool" of funds for overseas investments. During 1999 through 2001 victims routinely received correspondence from, and spoke with, the Edwards. The nation's expert on such scams, a senior official at the Federal Reserve Board of Governors, testified at trial. The Santa Clara County District Attorney's Real Estate Fraud Unit learned of the scheme in September 2001, when it was contacted by an 84-year old homeowner. The D.A.'s investigation learned that the elder had been convinced to borrow and "invest" $169,000 of her home's equity into RDI and two other nationally-known "top ten" fraudulent schemes: telephone services and cash transaction machines. The RDI scheme was shut down on March 25, 2002, by a federal court order obtained by the U.S. Securities and Exchange Commission (SEC) enforcement team in Dallas, Texas. This team had shut down an earlier version three years earlier in March 1999 and had learned of the Edwards's involvement. Since then, a court-appointed receiver has been working to recover victims' assets.