With family ties to Camden dating back six generations, Jonathan Latko was determined to rebuild a corner of his impoverished city by developing 124 apartments on a block along Market Street between the waterfront and downtown.
Looking for money during the recession in 2009, Latko and some similarly civic-minded friends turned to Remington Financial Group, a firm that boasted of arranging multimillion-dollar funding for huge projects.
Remington demanded - and got - a $12,500 up-front fee to arrange the financing, but it never materialized.
Federal prosecutors say Latko was defrauded. He is among at least 800 other people, many of them small businessmen and entrepreneurs, who were bilked out of at least $10 million by Remington between 2005 and 2011, prosecutors allege.
"I was the one who put up the money," said Latko, who is not a professional developer but works in Temple University's computer-recycling program. "I'm just an everyday guy, and $12,500 is literally all my savings."
So far, six former Remington officials have been indicted and two others have agreed to plead guilty. The indicted include co-owners Matthew McManus, 43, of Wyndmoor, who has been a generous donor to state political campaigns, and Andrew Bogdanoff, 65, formerly of Philadelphia and now living in Scottsdale, Ariz.
"The defendants in this case preyed upon innocent people who were looking for financing for their business ventures," U.S. Attorney Zane David Memeger said. "With false promises of financing, the defendants stole money from their victims and shattered hopes for economic prosperity."
McManus and Bogdanoff pleaded not guilty in Philadelphia on Thursday and were released on their own recognizance.
Defense attorneys say that developing commercial real estate is inherently risky and that their clients did legitimate loan financing.
One developer who benefited from McManus' loan work was Philadelphia's Bart Blatstein. He said McManus helped with funding for some of his projects, including the Edge, apartments that opened in 2006 for 1,200 Temple University students.
"Mr. McManus' Philadelphia-based operation secured financing for some of the largest and most complex deals in the region and elsewhere," said McManus' lawyer, Lisa A. Mathewson. "Developers sought the assistance of Mr. McManus and his team for their most challenging deals because of that track record."
McManus also had political connections. He stated on his website that former City Controller Jonathan Saidel was a board director for one of his other lending firms, Bluestone Real Estate Capital. Among the recipients of his political donations was state Treasurer Rob McCord's campaign, which got $14,000 in 2008.
McCord's chief of staff, John Lisko, said McManus may have discussed his firm's work with McCord, but the treasurer's office gave him nothing.
McManus also donated $12,000 in 2006 to then-Gov. Ed Rendell's campaign.
McManus issued a news release in 2007 stating that Saidel was named director of a Bluestone board. Mathewson said Saidel "did render services" on the Bluestone board.
But the former controller said he didn't remember it.
"All news to me," Saidel said in a series of e-mails. "Years ago, he asked if I would be in an advisory board. Board never created."
"He didn't ask me for anything. Forgot all about it."
Prosecutors said that while big projects involving Remington were completed, the same was not true for smaller loan applicants.
"Remington knew that it would be unlikely, if not impossible, to find funding," the indictment said.
This is how the alleged scheme worked, according to the indictment and interviews with Latko and his partners, Bryon Yoder and developer Shawn Burke. All worked in developing Camden housing through the Cooper Grant Neighborhood Association:
A New York loan brokerage firm referred them to Remington. After the Camden group paid the $12,500, Remington came up with a new demand: that the group demonstrate it had at least $2.7 million in assets and meet other conditions that were far beyond its reach.
The indictment states that Remington often set "unrealistic" conditions in an attempt to "frustrate customers and cause them to eventually give up and walk away from the advance fees already paid to Remington."
"We really had hopes," said Yoder, the neighborhood association president, explaining that more than a year of intense work had gone into the Camden project before the money was lost. "Nothing came of it other than them taking our money."
George C. Venizelos, special agent in charge of the Philadelphia division of the FBI, said Remington "targeted those victims who were desperate for any type of financing alternatives that would help keep their businesses and their business projects solvent, and their business dreams alive."
Frauds against small businesses fall into the gap between what regulators usually do. The U.S. Securities and Exchange Commission is charged with protecting investors in public companies, mostly larger businesses.
The Pennsylvania Securities Commission, which the federal prosecutors say provided the FBI with the initial leads for the Remington investigation, regulates small-scale stock and bond transactions.
Unlike some states, however, Pennsylvania laws do not treat loans the same way as securities.
California, whose laws do, banned Remington from operating in that state in 2003, and some of Remington's customers there were repaid.
Remington's operations went into a tailspin as the recession took hold in 2008, with revenues dropping precipitously. Several Remington staffers moved over to Bluestone, a firm McManus and Bogdanoff formed in 2007, prosecutors say.
Bluestone initially operated from the same Center City offices used by Remington. In March 2010 it moved to an office owned by developer Blatstein.
Among the former Remington employees moving to Bluestone was Daniel Gura, whom McManus had hired in 2006.
Gura, who is changed with conspiracy to commit fraud, helped Remington collect $7.4 million in fees, prosecutors said. His lawyer, Michael A. Schwartz, said Gura will plea guilty and is cooperating with the investigation.
No trial date has been set in the case, which is being prosecuted by David L. Axelrod.
Latko said he is pleased authorities are taking action, but continues to lament the loss of his investment.
"It's really heartbreaking because we were trying to do something for a city that has been beaten down." Latko said. "I'd rather have given my $12,500 to something in the city, to my church."