Fraudulent Real Estate Scam Results in Prison on Grand Theft, State Income Tax Charges
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Public Affairs Office
For Immediate Release
Sacramento – A San Diego man was sentenced to five years in prison on five felony counts of grand theft, four felony counts of failing to file state income tax returns, and one count of theft from an elder, the Franchise Tax Board (FTB) announced.
David M. Nicholson, 42, operated MTS Equity, LLC, a real estate loan company. Nicholson defrauded four of his clients out of more than $700,000 in 2005 and 2006. Nicholson promised the defrauded investors a real estate investment opportunity with monthly interest payments and return of principal within 12 months. The investment was secured either through fraudulent deeds of trust or deeds on properties with no equity. Nicholson’s business received more than $2.1 million in gross receipts during these same years and he failed to report this income on both his personal and business state income tax returns.
In addition to the prison sentence, restitution was ordered to the victims in the amount of $715,000 and to FTB in the amount of $433,601 representing the unpaid tax, interest, penalties, and the cost of the investigation.
San Diego County Superior Court Judge Charles R. Gill handed down the sentence Tuesday, August 9, in Department 31 of the San Diego County Main Courthouse. The case was prosecuted by San Diego County Deputy District Attorney Steve Spinella. This is a joint investigation between the San Diego County District Attorney’s Office and FTB.
FTB's criminal investigation program identifies and investigates cases of tax evasion and tax fraud to encourage compliance with California income tax laws and maintain public trust.
For more information on other taxes and fees in California, visit taxes.ca.gov.