Germantown Man Gets Prison After Investment Scheme Loses $2.2M: Feds

MILWAUKEE, WI — The former CEO of a real estate investing business in Wisconsin was sentenced to 16 months in federal prison recently after prosecutors said he defrauded over 20 people and caused at least $2.2 million in losses.

The 53-year-old man from Germantown, Joseph Nemeth, was one of two who founded "Wisconsin Home Buyers Network LLC," according to a news release from U.S. Attorney for the Eastern District of Wisconsin Gregory Haanstad. Nemeth had earlier pleaded guilty to a count of wire fraud, the news release said. Between 2012 and 2018, the company's partners solicited around $2.8 million from over 20 investors while promising "little or no risk" and returns between 12-36 percent, according to the news release.

But despite those promises, funds from the investors were not going to a successful business, rather, WIHBN was bogged by debt, deliquinent taxes and other issues that made it unable to pay out on the obligations to its investors, according to the U.S. attorney's news release.

"Rather than being used for the promised investment purposes, investor funds were comingled with other funds and were used for Ponzi-type payments to existing investors, payroll for related businesses, debt reduction, personal draws by the partners, back taxes, and legal fees," reads the U.S. attorney's news release. "When the partners were unable to pay as the promissory notes came due, they sought extensions, solicited additional funds from existing investors, and attempted to secure new investors. In the end, less than $400,000 of over $2.8 million in investor funds was returned to investors."

According to the news release, one victim of the investment scheme made remarks at the sentencing on July 24 while others filed impact statements. The statements explained how the scheme caused "significant financial and emotional harm."