Homes Linked to Newport Beach Investment Firm Raided by FBI

When wealth manager Bryan Werlemann began working with AB Capital in 2018, he wasn’t concerned about his non-registered personal investment. The real estate investment executives, Joshua R. Pukini and Ryan J. Young, fully checked out.

“Our kids were in the same classes at school,” Werlemann told OrangeCountyLawyers.com. “We were friends. All of our other friends were friends with them. I know other investors, very knowledgeable and smart investors, who had money with these guys.”

By 2020, however, he received a phone call from a fellow investor who was suspicious of the two co-owners and a couple of years later, Werlemann found himself contacting the FBI.

 

AB Capital Alleged Ponzi Scheme

Werlemann alleges a Ponzi scheme caused him to be defrauded of $2.7 million. Initially, the FBI did not respond.

“That’s the toughest thing in all of this is that it’s almost impossible to get the ear of the FBI,” Werlemann said.

Eventually, an involuntary bankruptcy petition was filed and last week on Feb. 27, federal law enforcement officers raided two residences in Orange County (DOWNLOAD COURT FILING).

One residence was in Newport Beach and the other was in Laguna Beach, according to Laura Eimiller, spokesperson for the FBI’s Los Angeles Field Office. As previously reported in the Orange County Register, the homes are allegedly those of Pukini and Young, AB Capital’s co-owners.

“It’s like a dream come true because I was in the belief that the system was completely broken and does not work,” Werlemann said in an interview.
Werlemann is a creditor in the bankruptcy but doesn’t expect to get his money back.

Eimiller told OrangeCountyLawyers.com that there were no arrests at the two locations on Feb. 27, no one has been arrested since, and no charges have been announced. “Typically, searches occur early on in an investigation so we have a continuing investigation into the case involving those two search warrants that were executed,” Eimiller said.

What is a Ponzi Scheme

A Ponzi scheme is an investment program in which money is solicited from investors who are promised some form of a return, but typically the promised returns are paid to the earlier investors with income received from new investors rather than from a legitimate business enterprise.

“A classic Ponzi scheme has no legitimate business at all, and it’s purely new money coming in to pay earlier investors,” said Los Angeles attorney Kathy Bazoian Phelps who wrote the LexisNexis published “The Ponzi Book: A Legal Resource for Unraveling Ponzi Schemes“. “There are hybrids where you have some legitimate business because you need some legitimacy to lure in new investors but sometimes it’s not even tied to what they say they’re doing in order to fund the promised returns to the earlier investors.”

In this case, AB Capital is a real estate investment company that provides loans and then syndicates and sells fractional interest in those loans to investors.

“This is what they were doing…a lot of these construction loans,” Werlemann alleges.

Attorney Phelps wasn’t surprised to hear about the Newport Beach case and its alleged Ponzi scheme.

Some 66 Ponzi schemes were exposed last year, which is double the number discovered in 2021, according to Ponzitracker, and almost 20% higher than 2022’s 58 schemes.

“It is a pervasive problem,” Phelps told OrangeCountyLawyers.com. “Every month, there are multiple, and sometimes, a dozen or so new Ponzi schemes that are revealed for the first time. It has not slowed down.”

AB Capital was contacted for comment, but could not provide any comment prior to publishing. This article will be updated accordingly if they respond.

Photo Courtesy KCAL News YouTube Screengrab.