LINCOLN — A former Kearney investor faces federal charges accusing him of defrauding real estate developers.
Jeffery S. Sikes, 34, was arrested last week in Kearney on a U.S. District Court indictment charging him with 19 counts of wire and mail fraud. A total amount of monetary loss isn’t listed in the indictment. However, court records say that, as part of an alleged scheme, he requested an investment of $150,000 from one investor and financing of up to $750,000 from another.
Sikes appeared in federal court Wednesday. The charges and their possible penalties were read to him, and he was released.
The Federal Public Defender’s Office was appointed to represent Sikes. A status hearing is scheduled for January.
Court records outline the case against him:
Between Feb. 1, 2012, and Sept. 30, 2013, Sikes allegedly contacted real estate developers and falsely claimed to have tenants to rent various retail commercial properties in Kearney and Grand Island. Sikes asked for a fee to be paid to him by the real estate developers for finding the tenants.
On some occasions, records say, Sikes said the money was to be placed into an escrow account until the lease was executed. Through email, Sikes allegedly gave developers instructions to wire money to bank accounts owned or controlled by him.
Sikes would then send emails to the alleged prospective tenant asking that the tenant take action to lease the property or return the fee allegedly placed in the escrow account. Records say Sikes knew no money had been placed into an escrow account, that there was no third party for the retail property, and that Sikes took the money and used it for his own purposes.
Between March 1, 2012, and Aug. 27, 2013, Sikes is accused of contacting a potential investor asking for $150,000 for a new company, Vanguard R and D. Records say Sikes claimed that if the investor paid the amount, he would invest another $150,000 into an IRA account for the investor.
Sikes claimed to have withdrawn money from his own IRA account and IRA proceeds from family members to invest in the new company. But federal prosecutors allege Sikes instead converted a portion of the funds for his personal use.
Sikes also falsely represented to the investor that a $150,000 IRA account had been established in the investor’s name by Sikes’ financial adviser, and Sikes mailed a copy of a statement of account to the investor. However, records say no money was placed into an account in the investor’s name, the financial statement was false, and Sikes used a portion of the money for his own purpose.
Between April 1, 2013, and July 1, 2014, Sikes and other people associated with Vanguard Nebraska contacted representatives of a Lincoln partnership about obtaining a lease for commercial space. Sikes claimed that Vanguard intended to establish lab space in Lincoln for use in research and development and that the partnership would provide $750,000 in financing.
To get the partnership to enter into the lease, Sikes claimed Vanguard would guarantee all of the amounts owed with a lease agreement and promissory note. Sikes gave the partnership a balance sheet allegedly representing Vanguard’s cash flow for 2010 to 2013 and another financial document generated by Vanguard.
But, prosecutors allege, Sikes knew the forms were false and misstated the financial condition of Vanguard to the partnership.
On June 19, 2013, Sikes executed a lease agreement between the partnership and Vanguard for the commercial property in Lincoln. As part of the agreement, the partnership agreed to lend Vanguard $750,000 to fund the cost of improvements to the property.
Vanguard agreed to execute a promissory note for the amount and guarantee the amount financed by the partnership. Sikes is accused of providing false invoices and bill statements falsely representing bills payable to subcontractors for work or construction costs for the commercial property.
Prosecutors allege Sikes sent instructions to the developers via email for the wire transfer disbursement of funds to accounts he controlled. Sikes would then take the false invoices and convert them for his personal use.