Disgraced The Patio Group Founder Gina Champion-Cain Sentenced To 15 Years In Prison For Fraud Scheme

March 31, 2021

The disgraced founder of San Diego-based The Patio Group, which once operated multiple restaurants around the city, Gina Champion-Cain has been sentenced to the maximum term of 15 years in prison for criminal charges stemming from an approximately $400 million fraud scheme.

In August 2019, news broke that Gina Champion-Cain was civilly charged by the United States Federal Securities and Exchange Commission (SEC) for allegedly operating a nearly $400 million "egregious fraud" against over 100 investors. The SEC ultimately obtained a consented-to asset freeze against San Diego-based ANI Development LLC and its principal Gina Champion-Cain and shuttered all her restaurants, including The Patio on Lamont, The Patio on Goldfinch, and Fireside By The Patio, amongst others. According to the 19-page complaint filed by the SEC, beginning in 2012 Champion-Cain's ANI Development raised hundreds of millions of dollars from investors by claiming to offer an opportunity to make short-term, high-interest loans to parties seeking to acquire California alcohol licenses. 

The federal government allege that the investment opportunity was "a massive Ponzi scheme," and defendants did not use investor funds to make loans to alcohol license applicants. Instead, Cain forged and fabricated documents, destroyed records, and directed significant amounts of investor funds to companies she controlled, as well as to herself and family members. American National Investments Inc. - the parent company of ANI and approximately 40 other businesses, including restaurants, rental properties, coffee shops and a surfing supply store - was also a named defendant. The court-appointed receiver estimated that there were approximately 500 investors in the liquor license lending scheme, of which an estimated 349 lost around $183 million. In April of last year, a U.S. District Judge approved a settlement agreement for the return of a small portion of misappropriated funds to several investors. This past January, a federal judge in San Diego signed off on a settlement between Gina Champion-Cain and the SEC, which stipulates that Champion-Cain must pay the "disgorgement of ill-gotten gains," plus interest and a yet-to-be determined civil penalty.

In July 2020, Champion-Cain pled guilty to criminal charges of conspiracy, securities fraud and obstruction of justice, where she faced up to 15 years in prison. Her sentencing has been delayed several times due to the COVID-19 pandemic. Today, Champion-Cain was sentenced to serve 15 years in prison for criminal charges of obstruction of justice in violation of 18 USC Section 1505, conspiracy in violation of 18 USC Section 371, and securities fraud in violation of 15 USC Sections 77q and 77x. Last week, federal prosecutors recommended a term of 130 months, but U.S. Judge Larry Burns decided Champion-Cain should face the maximum, stating her fraud to be a "monumental crime and a betrayal." After her prison sentence, Champion-Cain will also serve an additional three years of supervised release. Prosecutors have indicated that if Champion-Cain provides information that leads to charges and an indictment against others, they may file a motio to reduce her sentence. 

Judge Burns refused the request from Champion-Cain's counsel to postpone the start of her prison term so that she could get her COVID-19 vaccine. She was immediately taken into custody following the sentence and removed from the courtroom in handcuff restraints.

Last week, Champion-Cain's former chief financial officer Crispin Torres Jr., who entered a guilty plea in 2020 to a single charge of conspiracy in connection with the fraud scheme, was sentenced to four years in prison.