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federal judge has ruled that a Bellevue-based real estate investment firm, iCap, operated as a Ponzi scheme, using investor funds to repay other investors rather than generating profits from its promised real estate development projects. Chief Judge Whitman Holt made the finding in bankruptcy court in Yakima, part of an effort to dismantle the firm and find ways to repay investors who lost $230 million.

    Holt cited "substantial" evidence that iCap operated as a Ponzi scheme between 2018 and 2023, despite leaders' promises to direct investor funds into real estate projects. Investor attorneys allege the company targeted Chinese investors, paying them monthly interest payments while using new investments to repay earlier ones.

    The firm's former CEO, Chris Christensen, and his brother Jim, who worked as chief operating officer, have not commented on the allegations. No criminal charges have been filed against iCap's leaders, but the FBI and SEC are investigating. Attorneys for investors argue that most of iCap's revenue came from new investments, rather than profits from real estate development.

    Judge Holt noted that iCap's internal records showed a "low real rate of return" on its real estate projects, with just $1.4 million in profits between 2013 and 2022. He said investors would have been better off putting their money in Treasury bonds. The decision sets the stage for potential future lawsuits against the Christensens and other entities involved.

    Investors like Lilian Tan, who lost $1 million, say the ruling is a positive step forward. However, it remains unclear if investors will be repaid, as iCap had few assets to sell off and generate cash. Judge Holt hopes that between tax benefits and returns from future lawsuits, investors may receive at least part of their investment back.