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California Entrepreneur Created Largest Female-Run Ponzi Scheme To Defraud Unsuspecting Investors
Authorities said California entrepreneur Gina Champion-Cain brought in more than $350 million in a massive Ponzi scheme centered around liquor license applicants.
From the outside, Gina Champion-Cain appeared to be a successful San Diego entrepreneur and real estate developer with a group of thriving restaurants and retail stores.
But the image was only a mirage.
In reality, authorities say Champion-Cain was funding her lavish lifestyle and businesses using money she'd stolen in a massive Ponzi scheme totaling more than $350 million—earning her the distinction as the mastermind of the largest female-run Ponzi scheme in United States history, according to the latest episode of CNBC's “American Greed,” airing Tuesday.
When Champion-Cain arrived in San Diego from Michigan in the late 1980s, she had dreams of being a successful real estate developer and formed her own company, American National Investments.
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“I think her ambition was to be famous,” said Neil Senturia, author of a book on the scandal titled “I Did It.” “I think that you have to understand that if you pick real estate development, it’s pretty high-profile and they write articles about you and if you’re right, you make a lot of money.”
Champion-Cain quickly became a regular fixture in San Diego’s downtown and political scene, appearing in podcasts, television interviews and government meetings.
“She was very adept at interweaving herself into the fabric of downtown,” real estate manager Howard Greenberg recalled.
But Champion-Cain may not have been as successful as the image she was portraying.
“I learned little by little that many of the kinds of projects she claimed to have been the developer of, she was not, so high-rise luxury condominiums that she claimed to be an equity partner in ... she was not,” Lori Weisberg, a business reporter with The San Diego Tribune told “American Greed.” “In many ways, she conned people into believing she had done much more than she had and she was masterful at promoting herself.”
When the recession hit in 2008, Champion-Cain found herself trying to shift from commercial development to other ventures.
That’s when Drew Galvin, former assistant U.S. Attorney says that Champion-Cain felt “desperation” to be able to provide for herself and her family and developed a massive Ponzi scheme built on a lie.
The scheme centered around liquor license applicants. Typically, when a bar or restaurant owner is transferring a liquor license from a previous owner, they have to pay the full cost of the liquor license into an escrow account until California's Department of Alcohol Beverage Control (ABC) either approves or rejects the transfer.
“It can be very expensive. Depends on the area, depends on the type of license, but it can be anywhere from tens of thousands of dollars and it just sits there until the ABC approves or rejects your application for the transfer of a liquor license,” said attorney Mark Cramer, who represents investors who later sued Champion-Cain.
Champion-Cain decided to create a program that would seemingly help these restaurant owners by lending them the money from a set of investors, who would put the money into the escrow account. In exchange, once the ABC weighed in on the application, Champion-Cain said that the owner would not only return the money, but also pay interest on the loan.
To investors it seemed like an opportunity with little risk—since they believed the money was being safely held in an escrow account run by an established title company—but what they didn’t know was that, according to state regulations, bar and restaurant owners can defer funding their escrow account and therefore would never need to borrow money from investors.
Instead, authorities say Champion-Cain used money she gained from new investors to pay back older investors, while also embezzling her own funds to support her businesses and her lifestyle, U.S. Attorney’s Office said in 2021.
“The whole thing is a fantasy,” Cramer told “American Greed.” “It seems that from day one this was hatched as a fraudulent scheme.”
Over seven years starting in 2012, authorities said Champion-Cain brought in nearly more than $350 million from investors. While she paid some of the investors back with money she took from others, Galvin said her investors lost a total of more than $180 million.
Meanwhile, Champion-Cain was using the money to fund her own franchise of retail surf and beach shops and stable of restaurants across San Diego.
To keep the scheme going, she fabricated documents and forged paperwork, authorities said.
She’d later testify in a deposition that her plan had been to take her company public to earn enough money to pay back the investors that she owed—but she would never get the chance.
Champion-Cain was arrested in 2020 and is currently serving a 15-year sentence after pleading guilty to securities fraud, obstruction of justice and conspiracy.
To learn more about the sensational story, tune in to “American Greed,” Tuesday at 10 p.m. ET/PT on CNBC.
