Federal prosecutors say a trio of real estate developers who founded S3 Partners defrauded elderly investors and banks of more than $21 million in a real estate scheme. The three men allegedly engaged in securities fraud targeting elderly investors by encouraging them to cash out their retirement savings to purchase shares of S3 Partners, U.S. Attorney Melinda Haag said in a prepared statement Wednesday.
The complaint names Melvin “Rusty” Shields, 42, of Granite Falls, NC; Michael Sims, 58, of Gilroy, Calif. and Sam Stafford, 56, of Campbell, Calif.
They allegedly promised investors predictable high rates of return and promised minimal risk of investing. They also told the elders that profits from S3 Partners’ business projects would benefit a variety of charities and religious groups, according to the government statement.
FBI agents arrested Sims and Stafford May 24 on sealed arrest warrants and Shields was arrested in North Carolina. All three were released on $100,000 bond each and placed on electronic monitoring supervision until they are arraigned.
Sims and Stafford were set to appear in San Jose Thursday, May 31.
They are charged with conspiracy to commit wire, mail and bank fraud.
Case: U.S. v. Shields, No. CR12-410LHK