California Woman Gets 15-Year Sentence For "Massive" $350 Million Liquor License Ponzi Scheme

A disgraced former prominent California businesswoman will spend the next fifteen years in federal prison after she ran a “massive” Ponzi scheme that raised over $350 million from investors on the guise that she was financing liquor-license transactions. Gina Champion Cain, 57, received the 15-year sentence from U.S. District Judge Larry Alan Burns - almost 50% higher than the nearly 11-year sentence recommended by prosecutors after Cain pleaded guilty back in July 2020. The sentencing comes after the former Chief Financial Officer of Cain’s company received a four-year sentence for her role.

The Scheme

Cain was a well-known fixture in the San Diego business and hospitality scene, operating ANI Development, LLC (“ANI Development”) and an affiliate known as American National Investments, Inc. (“American National”). Sometime in 2012, Cain began pitching high-interest short-term loans to investors that would purportedly be used to fund the necessary capital requirements for third-parties going through the process to purchase a liquor license. Cain’s first investor, a high net-worth real estate investor who had previously invested with Cain, prepared an escrow agreement that provided, among other things, that his investment would only be used for the promised purpose and that his money would be kept in an escrow account for the duration of the license transfer process.  Cain allegedly falsely told investors she had cleared the form of the escrow company and also warned investors not to contact the company, in one instance emailing the escrow company and instructing them:

“[I]f they call asking about escrow agreements and alcohol licenses, blah, blah, blah… just say ‘SURE WHATEVER NOW SHOW ME THE MONEY… HAHAHAHA’” 

After Cain’s first investor personally invested approximately $250 million through accrued principal and interest rollovers, he began to bring in other investors who were provided with a list of potential liquor licenses they could fund that Cain claimed to have received from a California attorney.  Authorities alleged that the list “contained largely cancelled or expired liquor licenses.” ANI also raised funds from a second investor group that was provided with short-term promissory notes promising annual returns ranging from 15%-25% depending on the loan type.  Investors were provided with an escrow agreement signed by the company’s escrow officer.

However, authorities alleged that the investment strategy was nothing more than a massive Ponzi scheme, with ANI appearing to have used little of investor funds as promised. For example, investors allegedly deposited nearly $88 million in 2017 to a pooled escrow account yet not a single dollar was ever escrowed to “actually facilitate….the transfer of the alcohol licenses identified in the false investor escrow agreements.”  Instead, Cain allegedly used those funds to support other unrelated businesses controlled by relief defendant American National and also to make principal and interest payments to existing investors - a classic hallmark of a Ponzi scheme.  Through the unauthorized diversion of investor funds and the payment of above-average returns, the scheme also depended on an infusion of new investor funds since there apparently were no legitimate liquor license loans being made.  The escrow agreements were also purportedly phony, with Cain accused of forging the signature of escrow officers. 

DOJ Also Filed Obstruction Charges

When Ponzitracker originally reported on the Securities and Exchange Commission’s filing of an emergency enforcement action against Cain, that story noted the likelihood of potential criminal liability given the allegations of fabricated escrow agreements and doctored emails. While that prediction has since come to fruition in the form of securities fraud and conspiracy charges, Cain also pleaded guilty to obstruction of justice charges resulting from multiple actions taken to thwart the government’s investigation. As the Department of Justice stated:

Beginning in July 2019, after learning of investigations being conducted by federal agencies, she instructed her employees to destroy emails; not produce electronic calendar, messaging, and trash files; alter accounting records to hide the fact that investor funds were used to pay her personal expenses; and shred paper records. Champion-Cain even attempted to solicit an investment of $150 million in the hopes that she could use the funds to hide her scheme. Despite her efforts, investigators were able to recover a significant volume of the evidence Champion-Cain attempted to destroy.

There is no parole in the federal prison system, so Cain will serve at least 85% of her sentence assuming credit for good behavior. She was taken into custody immediately.

Victim Recovery

The Court-appointed receiver overseeing the recovery for Cain’s victims has obtained approval to pursue “net winner” investors who ultimately received a windfall from the scheme, but the Court has delayed the receiver’s request to pursue Chicago Title based on allegations the company may have liability for its role in the fraud. Cain’s investors have been free to pursue Chicago Title, however, which has to date resulted in multiple class action lawsuits and at least one settlement allowing certain investors to recoup nearly $15 million representing 65% of their losses.

The Court-appointed Receiver’s website is here.