Montecito resident and businessman David Prenatt was sentenced Monday to 51 months behind bars by a federal judge in Los Angeles after pleading guilty to one count of lying about his personal liabilities to three federally insured banks in order to secure more than $3 million in loans that he has yet to pay back. At the time he obtained the loans, Prenatt owed as much as $11 million in private notes that he did not disclose to loan officers for the three financial institutions. On the same day, county prosecutors filed a 64-count indictment against Prenatt, alleging he ran a Ponzi scheme between 2004 and 2008 in which he bilked 13 investors out of $13 million. If convicted on all charges, Prenatt, described by former friends and victims as tall, good-looking, and extremely charismatic, could face as many as 20 years in prison.
Initially, Prenatt had insisted he’d been a victim of the recession, making it impossible to pay back the millions he’d taken in as private investment loans, allegedly to promote some hotel or real estate deal. But FBI investigators and the federal bankruptcy court would discover that Prenatt was borrowing money to pay off previous investors and using the rest to finance a “wildly lavish lifestyle.” He bought fancy cars and collected designer watches; he gave generously — $119,000 — to charities and spent $375,000 on membership fees for exclusive travel clubs. He spent half a million on residential therapy for his daughter and became a big noise in the local mental health community.
Some of Prenatt’s victims — accomplished business professionals in their own right — submitted letters to the federal judge detailing how humiliated they feel to have been duped. Several said they regarded Prenatt as family and treated him accordingly. As a result, several said they have had to sell their homes and will have to abandon plans to retire. They complained bitterly that Prenatt had been allowed to prowl the Coral Casino and Santa Barbara’s coffee shops, ingratiating himself with prospective new victims. They described him as “a callous sociopath.” In the sentencing report, federal prosecutor Ariel Neuman said Prenatt came from “a good Catholic family,” had all the advantages of a good education, but was motivated by just one thing: greed.
- Bad Dream or Ponzi Scheme? [ October 21, 2010 ]