CHESTERTON | Former clients, co-workers and fellow church members were among the people who told police they lost tens of thousands of dollars in what they believed were legitimate real estate deals with a former real estate agent.
The six Northwest Indiana residents told Chesterton police they received little, if any, return on their investments and learned the money invested would not be returned.
Donald Johnson, 49, of Porter, was charged Friday with 14 felonies, including six securities registration violations, six broker-dealer registration violations and two counts of securities fraud.
Johnson, who is also a martial arts instructor, was arrested Sunday in Chesterton.
Court documents state Chesterton police investigated six cases in which Johnson is accused of soliciting money from acquaintances and business associates promising to invest in investment deals.
According to court document, Johnson was soliciting and selling unregistered securities by guaranteeing a certain high-interest return, usually in a real estate development.
Some investors rolled over IRA accounts and the money would go to Johnson's company, Private Lending LLC.
Charging documents state investors received promissory notes signed by Johnson that guaranteed a return. Many of the investors were unaware their money was missing because a third party company -- Equity Trust -- would continue to send the investors statements showing they had money in their accounts and even charged them custodial fees.
Police said some investors received interest payments as promised for some time, but when the payments stopped, and the investors asked for their money back, they were told that money was not available.
One man told police that $300,000 that remained after receiving a settlement from a “botched” back operation was signed over to Johnson in what he was told was a plan to buy property in Lake and Porter counties through sheriff’s sales. He was promised a 10 percent return on his investment and a promise his initial investment would also be repaid in seven years.
He told police received payments for about two years, then the payments stopped. He said Johnson refused to send any more payments or return the $300,000 principal.
The husband of one of Johnson’s former employees told police he invested his entire 401(k) – more than $101,000 – in what he was told was a Tennessee real estate project.
A part-time agent at Johnson’s former real estate company told police he invested $19,000 in the Tennessee real estate project. He soon realized the account in which the money was invested had no value. He was told the Tennessee project was on hold because the poor economy.
A former Hobart resident who hired Johnson to sell his home in 2005 or 2006 told police he invested $100,000 in 2007 in the Tennessee project. He also was told the project was on hold because of the economy.
A woman told police she met Johnson through another real estate agent at her church. She told police Johnson would help her refinance her home. That deal fell through and the woman lost her home. She said Johnson told her to invest $75,000 from her husband’s 401(k) and he would get her a home and invest the rest of the money in his real estate business. The woman told police she did receive a home in Michigan City, but the remaining money, about $25,000, was lost.
Another woman told police she met Johnson at her church, where Johnson was an elder. She said she invested $60,000 from a National Steel retirement account with a promise of a 30 percent return. She later learned that all her money was lost.
Johnson is expected to appear in court Thursday for an initial hearing.