The leaders of a defunct, Irvine-based investment firm have been charged with defrauding about 700 people of nearly $22 million and spending much of the money on themselves, the U.S. attorney's office said Friday.
Four former executives at Cross Financial Services Inc. were arrested Thursday and charged with 46 counts of securities fraud, mail fraud, wire fraud and money laundering, according to Anthony Pacheco, assistant U.S. attorney in Los Angeles.
According to a federal indictment, the Irvine company solicited investors during a 16-month period in 1993 and 1994. The company promised investors big profits, saying it would use their money to make short-term loans to businesses that had won government contracts, a practice known as "factoring."
But instead, Cross officials spent much of the money on big salaries and luxury items, including boats and an airplane, according to the indictment.