Matthew Cox | Inside True Crime Podcast
Kardashian's Realtor Arrested In $6M Ponzi Scheme
Wed, 07 May 2025
Justin Paperny explains how he was implicated in a securities fraud scheme.Connect with Justin https://www.whitecollaradvice.comhttps://www.instagram.com/whitecollaradviceteam/https://www.youtube.com/@UCLEIpw82n3AJ_zFJwkGQlSQ Control Body Odor ANYWHERE with @shop.mando and get $5 off off your Starter Pack (that’s over 40% off) with promo code COX at https://Mandopodcast.com/COX #mandopodGet 50% sitewide for a limited time. Just visit https://GhostBed.com/cox and use code COX at checkout.Do you want to be a guest? Fill out the form https://forms.gle/5H7FnhvMHKtUnq7k7Send me an email here: [email protected] you extra clips and behind the scenes content?Subscribe to my Patreon: https://patreon.com/InsideTrueCrime Follow me on all socials!Instagram: https://www.instagram.com/insidetruecrime/TikTok: https://www.tiktok.com/@matthewcoxtruecrimeDo you want a custom painting done by me? Check out my Etsy Store: https://www.etsy.com/shop/coxpopartListen to my True Crime Podcasts anywhere: https://anchor.fm/mattcox Check out my true crime books! Shark in the Housing Pool: https://www.amazon.com/dp/B0851KBYCFBent: https://www.amazon.com/dp/B0BV4GC7TMIt's Insanity: https://www.amazon.com/dp/B08KFYXKK8Devil Exposed: https://www.amazon.com/dp/B08TH1WT5GDevil Exposed (The Abridgment): https://www.amazon.com/dp/1070682438The Program: https://www.amazon.com/dp/B0858W4G3KBailout: https://www.barnesandnoble.com/w/bailout-matthew-cox/1142275402Dude, Where's My Hand-Grenade?: https://www.amazon.com/dp/B0BXNFHBDF/ref=tmm_pap_swatch_0?_encoding=UTF8&qid=1678623676&sr=1-1Checkout my disturbingly twisted satiric novel!Stranger Danger: https://www.amazon.com/dp/B0BSWQP3WXIf you would like to support me directly, I accept donations here:Paypal: https://www.paypal.me/MattCox69Cashapp: $coxcon69
Chapter 1: What led to Justin Paperny's involvement in a Ponzi scheme?
I'm Sean Property the Kardashian. I raised maybe 10 or 15 million dollars. I found a little glitch in the accounting system that enabled me to keep 100% of the commission. My sophomore year at USC, I learned that I have an older cousin who works as a managing partner at Goldman Sachs. So my mom called and said, why don't you just go spend some time with him at Goldman Sachs? I'm like, okay.
So for that summer, I'd get there at four o'clock in the morning, four or five days a week. I never want to tie before my ties to like right here. And I walk in and my cousin's like, so you're the baseball player. And I said, yes. He said, well, what do you want to do? So I'm thinking about going to graduate school. You didn't know him? He was much older.
And I knew that he was kind of infamous and managed a lot of money, very successful. So I knew of him, but my mom was proactive in reaching out and said, my son may have interest in this. I just want him to come and learn from you. So I spent that summer with him at Goldman Sachs. And I said, maybe I want to go to graduate school or maybe go into sales and become a stockbroker.
And he's like, nothing more than a used car salesman. If you're going to be a stockbroker, you need to go to graduate school or get a business degree. But I was very enticed by the amount of money they were managing there, right? $50, $100 million orders. It was intoxicating like playing baseball in front of 20 or 30,000 people.
So I said, I'm no longer going to go to graduate school when I graduate. I want to go into the brokerage business. So when I graduated USC in 1997, I began working at Merrill Lynch and just a young, cold calling salesman. I graduated college pretty fit as an athlete. Within a year, I've put on 40 pounds rationalizing.
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Chapter 2: How did the brokerage industry influence Justin's career choices?
It's the long days of hedge funds and mutual funds bringing in food in at five, out at 10, cold walking, cold calling to ensure I'm at the top of my list, right? So I get my securities license. And after about a year at Merrill Lynch, I raised maybe $10 or $15 million. And the brokerage industry was going through a change where they said, we don't want you to work by yourself.
We want you to become part of a team. I said, I kind of want to sink or swim on my own. I'm totally fine. They said, we want you to be part of a team. And I said, no. And they said, well, we'll reassess in 60 days. If you want to remain at Merrill Lynch, you're going to have to join a team. So over the next 60 days, I was watching this business more than I ever had.
And I started to see a lot of friends of mine flunk out of the business. And here's what happened. These junior brokers, maybe a five, $10 million. You go to USC, UCLA, Cal, you have 10, five, $15 million under business. You then merge your book of business with this senior broker.
And by merging your book of business, you think it's going to lead to internal life because you've got the senior broker mentoring you. But here's what happened. The junior brokers would end up managing the senior broker's book of business all day, doing all the client services work.
Then that junior broker is no longer prospecting to bring in business because he's doing all the senior partners work. And then all these guys start to flunk out of the business. So one day I'm in the human resource room and this guy Mike's like, oh, I got $10 million under management today. I'm like, how did you do it? Money manager, divorce attorney, how are you getting all this business?
He's like, well, a few of the guys I was mentoring, it didn't quite work out, which told me he took over their book of business while they're going to go do stock quotes at Charles Schwab.
and that's when i felt like i'm descending this is a wretched sickening business where everyone looks out for themselves and he's stealing from these young brokers and i said that will never be me so mary lynch gave me an ultimatum i said no i had worked hard i built a small little book of business i left i went to a small firm called crow weeden and within a year i had about 40 million dollars under management through hard work i'm not churning i'm not looking to make a trade to generate a commission i'm 23 24 making three four hundred thousand dollars i was successful
But I always tell people it's easy for someone you don't know to say no to you. It's difficult when it's a friend. So for two or three years into the business, I didn't want to ask any of my friends that I played baseball with at USC for their money, like Chuck Jones, Aaron Boone, Jeff Jenkins. I didn't want to ask them for their money. I didn't want my buddies to tell me no.
But after a few years in the business, I began to call my friends like, hey, I'd love to manage your money. And they're like, well, we've never heard of Crowe Whedon. You got to go through my agent. So I met with an agent named Danny Lozano in Beverly Hills. He ran the Beverly Hills Sports Council. And they had like Jose Canseco and Trevor Hoffman and Barry Bond, some really big agents.
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Chapter 3: What was the glitch Justin found at Bear Stearns?
Right.
So after about six months, I finally realized what happened. A number of our clients didn't transfer their book of business. And when I was so obsessed about getting caught from taking those commissions or I was enamored by our client's in the big leagues going on these private jets and going to spring training.
And, you know, I began to neglect some of those clients who gave me my start because I really built my business by cold walking. I would walk into a doctor or dentist or accountant office along Ventura Boulevard in Southern California, right out of USC and hand someone my card. And they'd say, it takes a lot of courage to walk in here.
And a dentist would say, well, come to my Rotary Club next week and speak. They're begging for speakers. And I'd speak in front of 30 people. Four of them would be dentists or doctors, and they'd hire me. That's how I grew my book of business. But a number of them felt as if they had been ignored because I became enamored by the bigger client, and that's when it hit me.
It is not illegal to treat clients differently, but it is unethical. And if you're out for your own self-interest, you should treat everyone the same way. I didn't. Then we began to feel pressure to prove worthy of this bonus. pressure to hit the numbers to justify this bonus.
And that changed one year to the day later, the 16th of June, 2002, when a hedge fund manager named Keith called and said, hey, I got a $6 million hedge fund. Can I transfer it to UBS? I'm like, yes, you can. Yes, you can. I'm ready to come and get the money. And that's when things... I actually knew when I took his money that it would go bad.
Growing up in Encino with Opportunity, you don't think prison bad, but I knew by taking his money, it would go bad. in part because I had worked with him years earlier in the industry. And I knew, to put it lightly, he would say some shady things to close a deal. But those feelings didn't dissuade me from taking his money. I had to get my numbers up.
All right. I do have a question at this. I mean... Sorry.
I was just... Yeah.
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Chapter 4: How did Justin's actions affect his career and personal life?
Right.
So eventually, one of these money managers he was going to buy a book of business from had some questions or concerns, and they wanted to meet with us at UBS. So part of this, what happens next is my plea agreement with the government. So I'm at this meeting in Century City with this guy, John, who's going to sell this book of business to Keith. It's like a $5 million book of business.
It's me and my senior partner, Kenny. And we're at this meeting, and my senior partner, Kenny, says to John, this guy who's going to sell the book, so why are you thinking about investing with Keith or giving him your money? And it's like, that's the wrong question. We know he loses every penny and he's a thief. Why ask that question?
And John, the money manager, says, well, I've seen rate of return on his hedge fund. Performance sells itself. So I tend to be verbose like you. I could wrap it up at times like you. I had no problem wrapping it up at that moment. That's it. I have a meeting upstairs. Within four minutes, the meeting had ended.
And I'm back up at my partner's office and we're like, oh my good God, this dude's going to sell his $5 million book of business under a rate of return that does not
exist and i foolishly believe that by keeping my mouth shut and turning the other way i would be protected but of course the government views omitting is deliberately his line i should have stepped up and say run don't give him your money go in a totally different direction instead i had rationalized that ubs was complicit with me we had this disclosure document if you send the five million sign this disclosure document the commissions are going to continue the money came in and he lost it and eventually it came crashing down
the 15th of December, 2004, when I'm on a lunch date at Houston's in Century City and my branch manager said... I'm sorry, where's all this taking place?
In Century City. Century City is where? Right next to Beverly Hills. Okay, okay. I was gonna say, for some reason in my mind, all of this was happening in New York.
No, I trained in New York when I was at Maryland.
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Chapter 5: What were the consequences of the Ponzi scheme?
It's a terrible way to live. Because what happens is you don't appreciate all that remains. I still had my youth, a supportive family, a brain. I could probably have found a way to recalibrate a lot of regret. I could have just left UBS and started over. You begin to live in this regret of all the things I could have done. And I begin to obsess over all that I've lost.
And then I needed a break, and I actually got my first big break. What was the first big break? I needed a break, Matt. I needed a damn break. About six months after I pled guilty to one count of conspiracy to commit fraud, my lawyer calls me. I had a new lawyer because I couldn't pay the old lawyer anymore. So I went to hire a law firm I could not afford.
So many defendants make that mistake of hiring a law firm they can't afford because they're enamored by the fact And we work with great lawyers. We've worked with more than 1,000 lawyers. But oftentimes, oh, he's a former prosecutor. It's very enamoring to a defendant. Like, oh, he's a former prosecutor. He's now a defense attorney. Not always a great thing. Can be. So I hired a Jones Day.
I couldn't afford them anymore. So I would go to the smaller firms. My lawyer, Bob Corbin, and Joel Athey called me together. And I'm like, great. They're calling me together. That means two bills at once. Get to the point. And they said, we're calling to tell you that Keith, my client, has been indicted on a new charges. I'm like, great, does this whole thing go away?
Like, can I just get back to the real estate thing now? They said, he's been indicted on you for like a straw man scheme. He was selling property. He was supposed to turn over the government. He found a straw buyer so we can keep some of the cash. I'm like, what does this mean? They're like, well, most of what he said against you, they're not going to use.
He's no longer in good grace with the government. The government is going to give you a second chance at veracity, not with the Department of Justice, but with the Securities and Exchange Commission.
So within two days, I was meeting with Bob Nixon and Cindy Tessero at the SEC in Mid-Wilshire, and they wanted to know more about the intricacies of UBS, how a firm of this size allowed a small-time hedge fund manager to run this ruse or fraud for so long despite compliance knowing.
My lawyer said, this is how you can go from five years to four years to three years, maybe avoid prison altogether, but you cannot lie because you already did that once. So for a year, my sentencing was delayed. A year, a great expense with lawyers. I spent time with the Securities and Exchange Commission, helping them understand how UBS, how this ruse happened, how it took place.
And as a result of that one year, just before I was sentenced, the Securities and Exchange Commission told the Department of Justice, we don't think UBS is a victim here. They are not. And the $8.5 million that UBS paid to victims, UBS, the SEC said, they're not a victim here. They can't come back after preparing for this money, in our opinion. And UBS never did.
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Chapter 6: How did prison change Justin's perspective on life?
By providing initial consulting at no cost, because my probation officer said, if you speak to people in the halfway house before you finish your sentence fine, if you charge a penny, I'm going to send you back to prison. I'm like, there's no value right now in money. It's just value. Am I good at this? Can I learn from this? Can I help someone?
So I tell people, just provide value somehow, some way, and opportunities will open. But if the expectation is I'm owed something or I need a job at this level to sustain myself, it's not in the interest of the person who you're asking that favor from, and it's never going to work. And these are lessons I learned through a lot of mistakes and finally trying to get it together.
In prison, even now, our entire business, so I call our advice, it's like organic. I want to pull out my iPhone. I want to film a video. I want to share a story, both good and bad. We've interviewed judges on YouTube. This is what a judge said. Do it or not. Right. Right. People like, so what is your sales pitch of white collar advice? I'm like, it's very clear.
Whether you use all the free stuff that we give away, where you hire our team, just do what federal judges have told us to do. Told us what the chief of probation we interviewed told us to do. Whether you do it or not is up to you, but it requires work. No happy talk. No bullshit. You actually have to do the work. And some do it. And of course, some don't. Some think their case is so unique.
They're so different. It doesn't apply to them. And I say, you got to own that. That's your own decision.
So your sentence – and you have 60 days before you go to prison. What do you do in those 60 days before you go to prison, like you personally? Like what was that – those 60 days like?
In your case, you were in custody, correct? So you were – Oh, no.
They called me with multiple passports. They weren't letting me. There was no – well, we're going to put you on an ankle monitor and let you self-rerender. Yeah.
You were not a self-surrender candidate. I guess when you're on the run for several years, you are not the candidate where the lawyer says, Your Honor, we think he's a good candidate to serve.
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Chapter 7: What lessons did Justin learn from his experience?
And one of them paid $12,000. One was like $6,000. One's $8,000. The total is $30,000 for four people. And to hire an attorney to fix the damage I'd done to the title of their home. Other than that, it's all title companies and banks. So to me, it's like, this is insane that I'm getting this much time. But look, the judge doesn't know any better. And that's where you fell on the guidelines.
And he was upset. And the whole mortgage crisis is going on. And all the newspapers are saying that these you know mortgage fraudsters mortgage fraudsters mortgage scams mortgage and then i get up there he hammered me and so uh and how long had you been in at that time a year i actually got sentenced a year to the day that i got arrested so did they send you to a medium They sent me to a medium.
The first day I got there, somebody got stabbed or a couple of people. But I know the conversation I had was when they started screaming lockdown, my celly, which I just met 20 minutes earlier, ran up. I'm like, what's going on? He's like, we got to get in the cell. He was, celly, celly. We got to get in the cell, man. We got to get in the cell. And I went, I said, what happened?
He said, he goes, oh, someone got stabbed in the rec yard. And I went, I said, I go, they killed somebody in the rec yard? He's like, nah, man, they just stabbed him up a little bit. And he did his hand like this.
I hate to laugh, but it's one of the best deliveries I've ever seen from you. That was really good. You'll never be able to do it that well again.
I'm in a place where the term getting stabbed up a little bit is a thing. And I was like, You know what I would have done if I were you? You're unprepared for this.
Yeah, here's what I would have done. I'd have pulled out a pen and paper and I just said, 26 years, less good time and time served. When can I get to a low? I mean, how long did it take before you got to a low?
Three years, a little over three years. Three years. And I was delusional too, by the way, because you understand, I never really let myself think I was gonna do 26 years. I was convinced I was gonna get them to send me to a camp in six or seven years or something. Somehow I was gonna get myself to a camp early.
and uh and i'd escape my first thought was i'll just leave like i'm not doing 23 or 20 20 because they're about 23 years i what i should i would have been out when i was 60. like i mean i'm supposed to be in prison right now so anyway yeah it was uh but yeah my allocution was not good i don't know what i could have done to because i was so overwhelmingly guilty
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Chapter 8: How is Justin helping others after his release from prison?
Like, what a mistake. Like, are you serious?
And that's what we want defendants to, like what Michael taught me in prison, you gotta be the CEO of your own life. You have to be engaged. If you hire a lawyer, you've got to let them know, I'm gonna be engaged. No one knows more about my own life. Then me and there's like these mechanisms people can benefit from to show why they're candidates. So people will say, I want to do the work.
Well, what does that work mean? In our opinion, you've got to be able to show progress over time to a case manager or a judge. So we've had case managers. We've had probation officers on our weekly webinar. And there was a case manager at Yankton who said, I follow the progress of people in prison. So we have a totally free platform. So when I was in prison, I maintained a blog, a website.
It cost money. We have Prison Professor Talent, which is run through the nonprofit. It's free. It enables people in prison to document their journey. through prison. They write a blog or a post, their release plan, book reports, progress reports, share it with our nonprofit. We post it at no cost to them. So we have people like Ryan Patterson, Tracy Hudson, who got 12 months in the halfway house.
They will take their talent profile together with their release plan and go into their case manager and say, I know everyone wants to get out of here earlier. I am no different. I wish I thought more about the decisions I made that led me here.
I'm simply here to share with you the progress I've made while I'm in prison, why I think I'm a candidate for an earlier release, not through asking, but by showing. Then they can show their profile. I'm not naive in telling you a case manager is going to read 300 posts, but they can see the defendants investing the time where the prisoner is to build, to teach.
We have people who will teach courses in prison on how to create a best-in-class reentry plan. So I think it's required to have a plan. It's extraordinary to teach other people how to do that. Then if you're Adam Clausen, who wouldn't even be eligible for earned time credits under the First Step Act, yet got a release after 20 years in prison because of the First Step Act.
How are you extraordinary and compelling? That requires creating and sharing. And we want people to understand the law and use it to their advantage. But you can't just rely on a lawyer to say why you're a candidate for leaners. You've got to... That book you have is an asset. My book was an asset. A post is an asset. We interviewed the former...
Chief of probation who said even if the initial plan is on a napkin Write it say what you're gonna do and then if you do it you have progress and that's how you overcome a cynical judge He says you only got sorry because you got caught you only found remorse Because you want to avoid prison or you only cooperated to avoid prison put yourself in the shoes of a judge of a prosecutor What is success for them and only then can you engineer a plan?
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