So you want to know how the 'rich' investors did in Bend Real Estate?

The following article in the Oregonian today, gives us some pretty firm figures. I've italicized all the pertinent Central Oregon sentences. Very revealing.

He is a crook. But he could just as easily been invested real money, and gotten the same results. Especially pertinent, is the owing 10 million on 8 million in assets. This result has nothing to do with original origin of the investment money. It implies, at the least, that the other 55% of Desertscape might be seeing similar results. In fact, I'd be willing to bet that many of the buyers in Bend are seeing similar results, but they just aren't being exposed in court documents:

Embezzler gets 3 years in Oregon banking scheme
As a fraud investigator for U.S. Bank, David A. Shelofsky took $1.5 million from people accused of bilking the bank
Friday, March 21, 2008
BRENT HUNSBERGER
The Oregonian Staff

A developer and former U.S. Bank fraud investigator is heading for 37 months in federal prison for embezzling $1.5 million of the very money he recovered from other bank fraudsters.

Besides serving the sentence issued Thursday, David A. Shelofsky must fork over as much as $1 million of net proceeds from future sales of tony central Oregon and Portland-area properties that he purchased partly with stolen money.

Shelofsky, 39, pleaded guilty in October 2006 to pocketing $1.5 million of the money he recovered from people accused of defrauding U.S. Bank, Oregon's biggest bank. He had served as manager of the bank's asset forfeiture and recovery section based in Portland when he took the money between 2002 and 2005.

During that period, Shelofsky and several business associates sank more than $20 million into prime commercial and resort lands, mostly around Bend's booming real estate market. In early 2006, Wal-Mart Stores Inc. bought land for a store in Redmond from Shelofsky and his partners for $10 million.

In court, the one-time California city police officer turned and apologized to his former bank manager and family for betraying their trust.

"I had no excuses," Shelofsky then told U.S. District Judge Garr King. "I do not blame my addictions, my alcoholism or my childhood. . . . I blame this selfish man standing before you."

The West Linn resident was scheduled for sentencing in March 2007 for committing bank fraud, punishable by as much as 30 years in prison and a $1 million fine. At the time, Shelofsky's attorney, Stephen Houze, maintained Shelofsky did not invest stolen money in his real estate.

King rejected a plea deal between the government and Shelofsky, suggesting a proposed sentence of a little more than three years was too lenient. He also voiced concern that neither U.S. Bank nor prosecutors had gauged whether Shelofsky profited from his ill-gotten investments. King ordered a more thorough accounting.

The financial review by Portland accountant Ron Hoevet traced $583,000 of embezzled money to properties that Shelofsky purchased. The holdings included a lot in upscale Pronghorn Estates golf resort outside Bend and a half share of an 18th-floor condo along Portland's South Waterfront.

But the recent decline in real estate values, particularly around Bend, led King to conclude Shelofsky might not profit from his investments.

A subsequent review by an accountant for DesertScape, a Bend development firm in which Shelofsky owns a 45 percent stake, calculated Shelofsky's assets at $8 million. But the review found liabilities of $10 million, including $5 million in outstanding mortgage balances, $3.4 million in debts to third parties and $1.2 million owed in taxes.

No windfall

During sentencing, King noted that he had imposed sentences of as much as eight years in past embezzlement cases involving similar amounts. But citing Shelofsky's unusual cooperation with prosecutors and the court, he said he would adopt the government's original recommended sentence of 37 months. He ordered Shelofsky to serve three years' probation upon release.

King also suggested an agreement aimed at ensuring Shelofsky doesn't reap any windfall from his investment of stolen money. The forfeiture agreement requires Shelofsky to use proceeds from the sale of properties or business interests to pay off debts and taxes. Shelofsky then would owe the government half of all remaining profits, up to $1 million.

King granted Shelofsky's request to serve his sentence at the medium-security federal prison in Sheridan starting June 2.

Shelofsky worked as a police officer in South San Francisco and Arcata, Calif., in the 1990s before joining U.S. Bank in Portland in 1997. He also volunteered for two years as a reserve police officer in Milwaukie.

His attorney, Houze, said Shelofsky had entered treatment for cocaine and alcohol abuse and recently had received a second-year "sobriety coin" from an Alcoholics Anonymous program.

Partners unaware

Houze said none of Shelofsky's DesertScape partners were aware of Shelofsky's crime before his confession in early 2006.

In an interview several hours after the sentencing, Shelofsky said ultimately the bank's discovery of his embezzlement spared him from losing his marriage and life to alcoholism. He said he spent much of the money he stole on cars, trips and "high living." He said a need to be accepted for his material possessions drove him to fraud.

"This is a chapter in my life that ultimately saved me and my family," he said. "It hurts. But I caused a lot of pain. I hurt people. I betrayed trust. . . . I am accountable."

He said he fully intends to sell his holdings, including courtside seats at Portland Trail Blazers games, and is considering a new career in counseling.

"I spent the last two years getting to know myself," he said, "and what I enjoy the most is helping other people."

Brent Hunsberger: 503-221-8359; brenthunsberger@ news.oregonian.com; http://blog.oregonlive.com/playbooksandprofits