Property investors hit back over $9m

A former US Supreme Court justice and a real estate investor have been targeted by authorities over schemes to defraud real estate investors out of millions of dollars.

Former New York judge Edward Harold King, 72, and Brooklyn real estate investor Sam Sprei, 37, were arrested this week on federal charges of wire fraud conspiracy. If convicted, they face up to 20 years in prison, Realtor reports.

Prosecutors say that Mr King and Mr Sprei stole millions from investors by multiple schemes, including holding out the former judge as a trusted escrow provider for sham transactions.

“Fraud that hides behind a veneer of legitimacy — especially the authority of a judge — strikes at the heart of public trust,” stated Internal Revenue Service Criminal Investigation (IRS-CI) New York Special Agent in Charge Harry T. Chavis Jr.

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Former Brooklyn Supreme Court Justice Edward Harold King is facing federal fraud charges. Picture: X/edking4judge

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Details of the alleged crime

“As alleged, the defendants stole millions of dollars from investors by cynically leveraging Mr King’s position as a sitting judge to lend false legitimacy to supposed investment opportunities,” said U.S. Attorney Joseph Nocella Jr.

“Today’s arrests demonstrate that this Office will hold accountable those who exploit victims for their own financial gain.

“Holding corrupt individuals accountable for the abuse of public trust will always be a priority of our Office.”

Between November 2024 and May 2025, Mr Sprei and Mr King “solicited the victims’ funds in fictitious investment opportunities, represented to the victims that their invested funds would be returnable on demand if the victims decided to cease involvement in the investments, and then later refused to return the money based on false excuses and converted at least a substantial portion of the victims’ funds to their personal uses,” alleges U.S. Department of Justice special agent Anthony Cunder in the criminal complaint.

According to the complaint, Mr Sprei presented two investors the opportunity to purchase commercial real estate located in Freehold, New Jersey, through a bankruptcy court auction. Mr Sprei said eligible bidders had to first show “proof of liquidity” by depositing funds in escrow.

Mr Cunder says that Mr Sprei made “numerous misrepresentations designed to deceive the Investors.”

Former Judge Edward Harold King and developer Sam Sprei were arraigned in Brooklyn federal court. Picture: Getty Images

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According to Mr Cunder, Mr Sprei told the investors that their funds would be placed in escrow with a reputable third-party escrow agent.

Mr Sprei also told investors if they decided not to participate in any bid on the property, they could advise the escrow agent and would receive the full amount deposited within two business days, Mr Cunder alleges in the complaint.

In addition, Mr Cunder says Mr Sprei told investors that “deposited escrow funds would not be used for any purpose or transferred out of escrow without the execution of further documentation and explicit authorisation from the Investors.”

Cunder says in the complaint that in February 2025, investors wired a total of approximately $8.9 million ($US6.5 million) in escrow — approximately $7.5 million ($US5.5 million) from “Investor 1” and $1.3 million ($US1 million) from “Investor 2 “ — to a bank account in the name of King, who Sprei told them was a New York judge.

In the days immediately following the wire transfers from the investors to the bank account in Mr King’s name, Mr Cunder alleges that millions of dollars of the investors’ funds were withdrawn or transferred to a bank account in Mr Sprei’s name.

Lower Manhattan skyline is seen from Brooklyn Bridge. Picture: Getty Images

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Real estate auction allegedly misrepresented

According to a notice published in a national newspaper in January 2025, there was indeed a legitimate public real estate auction scheduled for March 11 2025.

But Mr Cunder says the notice did not identify Mr King as an escrow agent, and that it set the required escrow deposit at only $344,000 ($US250,000), rather than the much higher $8.9 million ($US6.5 million) stated by Mr Sprei to investors.

There is no evidence in the complaint that a property was ever bid on.

According to Mr Cunder, the investors wrote to Mr King in April 2025 requesting the return of their deposited funds — and Mr King then provided false excuses as to why he could not return the $8.9 million ($US6.5 million).

In May, Mr Cunder says two wires in the amounts of $1.1 million ($US850,000) and $895,000 ($US650,000), respectively, were sent from a bank account under the control of Mr Sprei to the investors, representing a $2 million ($US1.5 million) return of their $8.9 million ($US6.5 million) investment.

Mr Cunder says Mr Sprei and Mr King have not returned any further funds to the investors to date.

“IRS‑CI will relentlessly follow the money, expose deception, and ensure that those who manipulate and mislead investors are brought to justice,” said Mr Chavis.

“Today’s arrests send a clear message: Schemes dressed up as opportunity will not shield wrongdoers from accountability.”

Parts of this story first appeared in Realtor and was republished with permission.

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