David Shelofsky pleads guilty to bilking investors out of millions with false business claims

A West Linn man pleaded guilty to federal charges of wire fraud and money laundering last week after admitting to stealing “millions” from investors while he posed as a successful businessman, prosecutors said.

David Shelofsky, 53, will likely face more than five years in prison and will pay a minimum of $3.3 million in restitution for the scheme, which stretched back to 2013, officials said.

About that time, Shelofsky lied to lenders and investors about real estate ventures in Bend and a hemp seed distribution business in West Linn, prosecutors said. He and two other unnamed individuals also formed a company that purported to mine precious metals from the waste of other mining operations.

“While the group made minimal efforts to operate the venture, Shelofsky misled several investors about the status of the operation to fraudulently obtain funds,” prosecutors said in a statement. “Shelofsky made repeated and deliberate misrepresentations and false promises about the status and success of his various ventures, the purported returns investors would receive, and the existence of collateral pieces of real estate supposedly backing investments.”

Prosecutors said Shelofsky used the proceeds of these schemes for personal expenses and “to support his own high standard of living.” Dozens of people lost “millions,” officials said, though they did not release an exact figure.

Shelofsky, a former police officer in California and real estate developer in central Oregon, had served as a fraud investigator for U.S. Bank in Portland before getting caught in 2006 embezzling $1.5 million of the money he had recovered for the bank. He was sentenced in 2008 to a little more than three years in prison and was released in 2010.

Shelofsky will be forced to pay at least $3.3 million in restitution under plea agreement, but prosecutors could argue for up to $16 million. He is expected to be sentenced Nov. 12, prosecutors said.

Shelofsky’s attorney, Ron Hoevet, said prosecutors had agreed to recommend a sentence of 63 months and described the idea of Shelofsky paying $16 million in restitution as “fanciful.”