PORTLAND, Ore. — Berjac of Oregon attracted investors through a basic business model, but prosecutors say at some point, the company started making risky bets on real estate and investors had no idea.The Eugene-based firm extended short-term loans so small businesses could cover insurance premiums. Investors made money as borrowers paid back those loans with interest. Stable returns and low risk kept the business going for decades, the Oregonian reported.
By the time Berjac toppled in 2012, prosecutors said executives had constructed a $40 million Ponzi scheme that hurt more than 400 investors.
Now, four members of Berjac’s founding family face federal criminal charges.
A grand jury indicted brothers Gary and Michael Holcomb, as well as Michael’s daughters Jennifer Chalmers and Kristen Van Breemen on Nov. 19. They were charged with 24 counts, including conspiracy, mail fraud and money laundering. The brothers, now in their 70s, also face bank fraud charges.
Fred “Jack” Holcomb founded Berjac 50 years ago. It expanded to satellite offices in Oregon, Colorado and Washington.
Prosecutors said by 2008, the defendants had started steering investors’ money away from the insurance-premium business. They bought a family vacation home and sunk millions of dollars on failed real estate projects. They arranged credit lines and tapped them to bolster the firm’s portfolio. And they used money from recent investors to repay earlier ones — a Ponzi hallmark.
As Berjac’s finances began to buckle, investors were apparently kept in the dark.
“Defendants failed to disclose to investors that Berjac of Oregon and Berjac of Portland were insolvent and acted as a Ponzi scheme — that is, the insurance premium financing business had not generated sufficient returns from which to pay interest and redemptions to investors,” the indictment said.
Jennifer Chalmers was the only defendant who could be reached by The Oregonian. “At this time, I’m not ready to discuss that,” she said before hanging up the phone. No attorney is listed as representing Chalmers or her relatives.
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