California Attorney General Jerry Brown filed criminal charges on Thursday against three men for allegedly swindling more than 1,000 individuals in a $200 million real estate and construction Ponzi scheme, his office said today.

The three men, James Stanley Koenig, Gary T. Armitage and Jeffrey A. Guidi were arrested last night and are now in custody, the Brown said in a statement.

The men were charged with selling securities by means of false statements or material omissions in violation of the law, as well as residential burglary. Their bail has been set at $5 million each.

They took investors money and used it to pay for an 80-acre castle estate, a Lear jet, luxury homes and fancy cars. The Ponzi scheme ultimately collapsed under its own weight, causing hardship to thousands, many of whom were retirees who lost their life savings,” Brown said.

The charges allege the men created 55 businesses over 10 years to keep the scheme afloat.

The men recruited potential investments through “investment planning seminars throughout the state, putting amounts ranging from $50,000 do more than $1 million. Businesses included construction and real estate projects where investors were promised returns averaging 12 percent.

Brown says many of the projects were poorly managed and unviable while others were left unfinished or ended up in foreclosure. Instead of informing investors about the failures, the men would attract new investors to use their funds to pay off earlier investors.

In other projects, the men set up several companies to buy and manage more than 20 senior housing and residential care facilities. Funds obtained were not reinvested into the facilities but were pooled and used to pay interest to investors and keep other investors at bay, the attorney general alleges.

Under the weight of debt, the defendants were unable to pay debts but still continued to raise funds. However the last of the men’s businesses closed in June 2008.

California Jerry Brown