A Garden Grove man who sold stakes in an ostrich-breeding business has been ordered to pay $890,000 for allegedly misusing investor money, the Securities and Exchange Commission said Thursday.
A federal judge in Santa Ana ordered David Hudson III to pay back $819,000 in allegedly ill-gotten gains plus $71,000 in interest, the SEC said.
The agency charged that principals of the Ostrich Group Inc., in which Hudson was a partner, sold contracts in the ostrich-breeding business while "transferring most of the funds to themselves and their family" instead of buying the birds.
In addition, Hudson acted as an unregistered broker-dealer when he sold shares in the business, the SEC said.
The Ostrich Group raised $800,000 from more than 80 investors, saying the ostriches would be "generating substantial cash-flow revenues in a very short while," the SEC said.