Class Project in Fraud?

March 27, 2006

The University of Southern California has put an instructor in its business school on leave after he was arrested by Federal Bureau of Investigation agents Friday on charges that he used students -- without their knowledge -- to defraud them and investors of more than $1.5 million.

Barry H. Landreth, the instructor, is being held in jail and could not be reached for comment. His lawyer told California reporters that he hadn't had time to review the charges and so couldn't respond to them.

Landreth, who earned a master's degree in real estate development from the university in 2001, has worked in recent years as a part-time lecturer at Southern Cal's public policy and business schools. University officials said that they couldn't comment on the case except to confirm that he had been employed there, and that he was currently on leave, but had been teaching this semester.

But court documents filed by the FBI charge that Landreth used his classes to recruit unwitting assistants for his scheme. According to the FBI documents, Landreth recruited students in his courses to sell investments through a real estate company he ran, which he said had the rights to valuable property in Chicago and Las Vegas.

The students were told that they would be paid for their work and that investments they made would show huge returns. Several of the students invested their own money and family members' money -- sometimes in excess of $100,000 -- as well as seeking funds from others.

According to the FBI, some of the students -- who are identified only by first names in the court documents -- began to suspect that something was wrong when they were not paid and the promised payoffs on their investments and those of their family members were not coming through. The documents portray the students as becoming increasingly concerned about the run-around they were receiving from Landreth and the excuses that didn't make sense to them.

The charges against Landreth say that he didn't invest the money he received, but instead spent the funds buying and caring for show horses.

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