Leo Wheeler, 56, pleaded guilty to one count of mail fraud before United States District Judge Garland E. Burrell Jr. on Friday, Aug. 26, according to a report from United States Attorney Benjamin B. Wagner.
When he's sentenced on Nov. 18, Wheeler will face a maximum of 20 years in prison, a $250,000 fine and a three-year term of supervised release, according to Wagner's office. However, Wheeler's sentence will be at the court's discretion after considering statutory factors and the Federal Sentencing Guidelines, which take a number of variables into account.
Wheeler admitted to defrauding more than 10 investors of hundreds of thousands of dollars by submitting approximately 85 fraudulent invoices for work he falsely claimed he had performed on a 30-lot subdivision known as Creekside Oaks Estates, Wagner's office reported.
Creekside Oaks Estates is located on 14 acres at 18765 Hartmann Road, Middletown, according to Lake County planning documents.
Wheeler originally was indicted on 29 counts of mail fraud related to the real estate investment scheme he operated in Lake County, according to a December 2010 report from the US Department of Justice.
According to the original indictment, from 2005 to 2007 Wheeler had solicited investors to provide money for loans to be used for the Hartmann Road real estate project, guaranteeing investors an 11-percent rate of return and six months of prepaid interest.
The US Attorney's Office's latest report said Wheeler, a licensed building contractor, used three fictitious companies – Kenneth Gutman Trucking, SNC Solutions and California Maintenance – to funnel funds to himself and to other projects on which he was reportedly behind.
In 2007, Wheeler sought a two-year time extension for the subdivision's tentative map, which the Lake County Planning Commission recommended that the Board of Supervisors approve. Following a public hearing on July 17, 2007, the board granted the extension, county documents showed.
No more recent records of the subdivision appear in county supervisors' or planning commission documents and minutes, and Lake County Senior Planner Emily Minton could not be reached on Monday for comment about the subdivision's current status.
Wagner's office said the case against Wheeler, which is being prosecuted by Assistant United States Attorney Russell L. Carlberg, is the product of an investigation by the Internal Revenue Service-Criminal Investigations.
During an interview with an Internal Revenue Service special agent, Wheeler admitted he had falsified numerous invoices and wrongly diverted investor funds, Wagner's office reported.
Last December, the US Department of Justice announced the charges against Wheeler during Operation Broken Trust, the first nationwide effort of its kind targeting investment fraud.
During Operation Broken Trust, which ran from August to December 2010, investigators targeted hundreds of criminal and civil defendants in cases involving more than 120,000 victims and billions of dollars in criminal and civil losses, the Department of Justice reported.
E-mail Elizabeth Larson at
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