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federal judge has ruled that iCap Equity, a Bellevue-based investment firm accused of swindling hundreds of real estate investors, operated as a Ponzi scheme. Chief Judge Whitman Holt made the finding in a Yakima bankruptcy court, where he also declared that 1,800 investors who sank $230 million into the firm were defrauded.

    The ruling sets the stage for potential future lawsuits against iCap executives and banks used by the firm, which could help investors seek tax deductions for their losses. Holt stated there was "substantial" evidence that the company operated as a Ponzi scheme between 2018 and last year.

    iCap executives promised to direct investor funds into development projects, including in the Seattle area, while paying monthly interest payments. However, the firm quit making these payments last spring, prompting investors to sue. iCap subsequently filed for bankruptcy, with a restructuring firm taking control.

    After reviewing financial records, the firm concluded that iCap operated as a Ponzi scheme. Attorneys for former CEO Chris Christensen did not present any arguments or evidence in court and declined to comment on the ruling. No criminal charges have been filed against iCap's leaders, but the FBI and SEC are reportedly investigating.

    The company's financial records show it invested $103.4 million in real estate projects between 2013 and 2022, selling developments worth $104.8 million with a net profit of just $1.4 million. A consultant testified that iCap would have been better off investing in Treasury bonds. The restructuring firm has sold 15 properties for $19 million, but no investors have been repaid yet.