VALPARAISO, Ind. (STMW) — Six people thought they’d invested in a Porter County company that put together lucrative real estate deals in Tennessee or bought land from sheriff’s sales in Lake and Porter counties.

Instead, they lost a total of at least $655,463, and a town of Porter resident faces 14 felony charges for allegedly selling unregistered securities from an unregistered, and now defunct, business from July 2007 through December 2010.

Donald M. Johnson, 49, was also not licensed to sell securities and is scheduled for an initial hearing Thursday with bail set at $50,000. He was being held at the Porter County Jail on Monday night.

Johnson described himself to police during a September 2012 interview as a self-employed martial arts instructor and former real estate agent who had his license taken away by the Indiana attorney general’s office, court files state.

The investments were through Private Lending LLC, which he said during the interview was registered with the secretary of state’s office from July 2007 to March 2011.

The Indiana secretary of state’s securities division began investigating Johnson in January 2012 after one of the alleged victims contacted the office and Chesterton police about a September 2009 investment with a high-interest return that suddenly paid smaller amounts in August 2011, then stopped paying.

The man, who bought a home through Johnson, paid Johnson $300,000 with the promise of 10 percent interest and the principal being repaid in seven years, but Johnson refused to continue paying or return the initial investment, the victim said. The man, like most of the alleged victims, told investigators that Johnson never mentioned the investment wasn’t registered with the state and that Johnson wasn’t registered, either.

Many of the alleged victims had their money put into or rolled over their IRAs to Equity Trust, “an independent IRA custodian which is often used by securities fraudsters and very familiar to this investigator,” stated Charles Williams, an officer with secretary of state’s securities division.

Williams said the state investigation showed that Equity Trust paid money to Private Lending LLC, which went to some interest payments and then to other Johnson accounts to pay his bills.

Porter County Prosecutor Brian Gensel said that investigators don’t know of any other victims, but anyone who believes they were victimized should contact Chesterton police.

(Source: Sun-Times Media Wire © Chicago Sun-Times 2014. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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