Robert Langguth allegedly cheated more than 100 investors out of $16.7M
Robert Langguth, a hubcap salesman turned real estate investment expert at age 61, is scheduled to appear in court next week for a plea agreement on charges of fraud and money laundering.
Charges were filed against Mr. Langguth, a resident of Austin, Texas, on Nov. 1 for defrauding investors of an estimated $16 million through a real estate Ponzi scheme, according to court documents.
Mr. Langguth, who sold his hubcap business, Wheel Master Inc., in 1997, got into real estate lending in 2001, working briefly for a company, Capital Funding, that put together loan packages for real estate developers. Mr. Langguth launched his own business shortly thereafter, representing himself as an “experienced real estate bridge lender,” according to the documents.
The scheme purported to be making short-term bridge loans to developers who would repay the loan from proceeds of a sale of the property or from long-term financing. The U.S. attorney for the Western District of Texas alleges that between 2005 and 2009, Mr. Langguth was operating a Ponzi scheme, paying off earlier investors with money from newer ones.
The website of Austin television station KXAN quoted a friend of Mr. Langguth and his wife, Claudia, as stating that they began “acquiring expensive jewelry, designer clothing and a passion for international travel.” Most of Mr. Langguth's investors were family, friends and business associates, according to KXAN.
The Langguths filed for bankruptcy in March 2010. More than 100 people lost a total of $16.7 million in the alleged scheme, according to a law firm that investigated the claims.
“You have to research people you invest with. The short-term loan business is inherently risky and can be very opaque,” said Robert Elder, head of communications at the Texas State Securities Board, which investigated the case. “People could have checked with us or with the real estate commission and found out that [Mr. Langguth] wasn't licensed to sell securities or real estate.”