Paulic and Long co-founded Integrity Financial AZ, LLC, or IFAZ, which had regional offices near Cleveland, Chicago and Sacramento, Calif.

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CLEVELAND -- Two men were indicted on charges they defrauded approximately 60 people out of more than $6.5 million through a fraudulent Arizona real-estate development investment, law enforcement officials said.

Stanley M. Paulic, 41, of Aurora and Steven R. Long, 45 of Mather, Calif., each face one count of conspiracy to commit mail fraud and wire fraud and one count of wire fraud.

"These individuals ripped off dozens of people, stealing life savings and creating real financial hardships," said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio.

"These two individuals stole the hard earned money of others for their own greedy benefit," said Stephen D. Anthony, special agent in charge of the Federal Bureau of Investigation's Cleveland office. "The FBI and our partners will continue efforts to root out such deceitful perpetrators."

Paulic and Long co-founded Integrity Financial AZ, LLC, or IFAZ, which had regional offices near Cleveland, Chicago and Sacramento, Calif. Beginning around 2008, Paulic served as chief executive officer of the company while Long served as president.

Together, the two conspired to unlawfully enrich themselves through false pretenses, representations and other means to individuals seeking to invest money in a legitimate enterprise and instead converting that money to Paulic and Long's personal use, according to the indictment.

IFAZ solicited investor funds for the purported development of residential real estate in Tonapah, Ariz. At no time during the periods mentioned in the indictment did Long, Paulic or IFAZ register with the U.S. Securities and Exchange Commission.

Paulic and Long represented to prospective investors and IFAZ owned land and built homes in Arizona. They represented to investors that they rented these homes to individuals who were unable to qualify for standard residential mortgages and then, once those renters improved their credit scores, IFAZ sold the homes to them at substantial profit, according to the indictment.

They made these representations in a variety of ways: through the IFAZ web site, holding seminars, including one in Beachwood, Ohio, in April 2009, mailing pamphlets to individuals, including a Richmond Heights resident in 2008, and buying advertisements, such as one purchased in a newspaper in Cleveland in 2009, according to the indictment.

Paulic, Long and IFAZ promised investors they would earn rates of return between 10 and 20 percent, with returns being distributed monthly. Investors were also told their investment would be secured by a deed of trust for a property in Arizona, and that not more than one deed would be associated with each parcel, according to the indictment.

In reality, Long recorded multiple deeds on single parcels and monthly payments made to investors came, at least in part, from other investor funds, according to the indictment.

Paulic and Long used IFAZ investment funds to pay for personal expenditures and expenditures of non-IFAZ corporate entities. For example, from March 2008 to August 2009, Paulic received approximately $586,225 in wire transfers from IFAZ, according to the indictment.

Overall, approximately 60 people invested approximately $8.1 million in IFAZ. Approximately $1.6 million was returned to investors, resulting in a loss to investors of approximately $6.5 million, according to the indictment.

The case is being prosecuted by Assistant U.S. Attorney M. Kendra Klump following an investigation by the Federal Bureau of Investigation and U.S. Postal Service.

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