Two Monterey businessmen have been indicted in federal court in San Jose on charges of defrauding investors in a now-bankrupt real estate lending company of up to $100 million.David Nilsen, 58, the founder of a Monterey-based lending company called Cedar Funding Inc., and Manoel Errico, 55, the company loan servicing manager, were indicted by a federal grand jury on Tuesday.The charges include 31 counts of conspiracy, mail fraud, wire fraud and securities fraud. U.S. Attorney Joseph Russoniello said the indictment was sealed until Nilsen was arrested after surrendering to authorities in San Jose today. Nilsen made an initial appearance before a magistrate in San Jose today, was released on a $1 million bond and is due to reappear in court on Sept. 28 for identification of a lawyer and bail review. Errico is a fugitive, Russoniello said.Cedar Funding and a related firm, Cedar Funding Management Corp., made loans to real estate developers and promised investors fractional interests in individual loans, according to the indictment.The indictment says that by the time the two companies went into bankruptcy in June 2008, they had more than 1,000 investors who had provided more than $150 million in funding for 150 loans. It estimates that when the bankruptcy proceedings are completed, the investors’ losses “will exceed $100 million.”The indictment alleges that the two men defrauded investors by making false statements about the safety of the loans,misappropriating investment funds for their personal use and using funds from new investors to pay interest to previous investors.The 31 criminal counts each carry possible criminal sentences of up to 20 years in prison upon conviction, but the actual sentence, if the men are convicted, will be determined after consideration of federal sentencing guidelines. Both men are Monterey residents, Russoniello said.
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