Investment Fraud Orange County

A state agency filed suit to close three Orange County financial brokers for allegedly duping customers--many of them elderly--into investing $26 million in unregistered certificates of deposit. The Department of Corporations, in a filing last week in Superior Court in Los Angeles, alleged that the companies--CD Services Inc. and Nationwide CD Corp., both of Laguna Hills, and Leisure World Financial Services Inc.

A federal bankruptcy judge has ruled that a Newport Beach businessman defrauded investors by masquerading as an Air Force colonel, a Harvard-educated lawyer, a CIA operative and a prisoner of war in Laos. Judge Robert W. Alberts also ruled that Edgar Dale Allen, 70, lied to Bankruptcy Court about his business and personal background.

On the last night of 1998, Luigi DiFonzo descended the spiral staircase of his mansion in Laguna Niguel and beheld the wealth and power before him. Millions of dollars had poured into his investment firm, DFJ Italia Ltd., and they flowed through every inch of his 14,000-square-foot hilltop castle. Italian marble covered the floors. The cabinets contained crystal glasses etched with his initials. The pool table was mounted on carved wooden lions.

In a cautionary tale for small companies and investors, a professional gambler and convicted scam artist agreed to plead guilty to issuing nearly $16 million worth of counterfeit stock in an Orange County Internet start-up. Maseia "Matthew" Bardasian, 68, of Reno acknowledged his role in a fraud and money-laundering scheme that flooded the stock market with 1.1 million shares of MindArrow Systems Inc., according to papers filed Thursday in federal court in Santa Ana.

Ending the only federal case against a brokerage linked to Orange County's bankruptcy, a Wall Street firm and two employees agreed Thursday to pay $870,000 to settle charges they failed to disclose the risks of investing in county bonds. The Securities and Exchange Commission had accused C.S. First Boston Corp. of intentional fraud and reckless conduct in helping the county sell $110 million in pensions bonds just before it declared bankruptcy in December 1994.

A U.S. District Court judge has ordered two individuals to repay nearly $500,000 they allegedly collected in a Newport Beach investment scam. Judge Dickran Tevrizian ordered Michael A. Todd and his wife, Kim J. Brown, to pay a total of $488,917, which they received from the sale of shares in Casino Cruise Corp. and BRW Leasing Inc. The judge also ordered them to pay a civil penalty of $110,000 each, according to the Securities and Exchange Commission.

About 1,000 investors who lost their life savings in the collapse of Hill Williams Development Corp.--which became one of Orange County's costliest real estate scams--have filed a lawsuit accusing one of the firm's former promoters of hiding assets in order to avoid a $23-million judgment. The suit, filed in Orange County Superior Court, contends that David A.

Newport Pacific Corp., a defunct Orange County development and mortgage investing firm that once built as many as 2,000 apartment units a year, has been sued for fraud in a civil case filed on behalf of more than 70 investors. The case puts Newport Pacific founder Magdy Hanna--a onetime Anaheim political power broker--atop a list of more than 150 defendants.

Investors who lost $15 million in the collapse of an Orange County real estate company in late July filed a lawsuit Tuesday charging that former owner Magdy Hanna and others lied to them about the company's financial health and other problems. The lawsuit, the first one filed after the fall of Newport Pacific Group and its related companies, accuses Hanna and other officers of violating federal and state securities laws in selling high-risk notes that weren't registered with regulators.

Luigi DiFonzo, who died two months ago amid accusations that he swindled investors out of $40 million, used prescription drugs to commit suicide, according to an autopsy report released Friday by the Orange County sheriff-coroner's office. But the widow of DiFonzo immediately decried the results and said she would challenge them. "There were a million different ways he could have died," Brenda DiFonzo said in an interview Friday. "I'm not going to let them shove him under the rug."

A Laguna Niguel man was convicted Thursday of bilking investors, most of them elderly Orange County residents, out of more than $10 million by selling them practically worthless oil and gas partnerships. After deliberating for two days, a U.S. District Court jury in Santa Ana found Lance Van Alstyne, 34, guilty of engaging in a Ponzi scheme from 1992 to 1994. "As Ponzi schemes go, this is a medium-sized one," said Thom Mrozek, a spokesman for the U.S. attorney's office in Los Angeles.

A twice-convicted Fullerton man was arrested Wednesday on charges of bilking at least 130 investors out of more than $15 million in a yearlong Ponzi scheme that promised huge returns for trading in offshore letters of credit. Scott K. Yoshizumi, 39, faces 24 criminal counts of fraud and money laundering in a federal grand jury indictment that was returned Tuesday. He was ordered held without bail Wednesday as a flight risk and an "economic danger" to the community, said Assistant U.S. Atty.

On the last night of 1998, Luigi DiFonzo descended the spiral staircase of his mansion in Laguna Niguel and beheld the wealth and power before him. Millions of dollars had poured into his investment firm, DFJ Italia Ltd., and they flowed through every inch of his 14,000-square-foot hilltop castle. Italian marble covered the floors. The cabinets contained crystal glasses etched with his initials. The pool table was mounted on carved wooden lions.

Luigi DiFonzo, who died two months ago amid accusations that he swindled investors out of $40 million, used prescription drugs to commit suicide, according to an autopsy report released Friday by the Orange County sheriff-coroner's office. But the widow of DiFonzo immediately decried the results and said she would challenge them. "There were a million different ways he could have died," Brenda DiFonzo said in an interview Friday. "I'm not going to let them shove him under the rug."

An Orange County jury has convicted a former investment advisor of bilking an elderly Garden Grove woman, who is now dead, out of $603,000 that she had intended to benefit more than a dozen charitable organizations. Stephen Cuccia Jr., 41, was found guilty Monday of one count of attempted grand theft and six violations of state securities law, including making material misrepresentations in the sale of securities. He faces a maximum sentence of seven years in prison when he is sentenced Sept. 1.

A former Orange County man who created a sham mutual fund pleaded guilty Monday in Santa Ana federal court to cheating 250 investors out of millions of dollars. From 1983 until his scheme collapsed in 1997, Wilfred J. Madon claimed to run a stock fund called Capital Growth Group, which he said had $46 million in assets and compared favorably to Fidelity Investments' high-profile Magellan Fund, prosecutors said.

Six Orange County men convicted of defrauding more than 1,500 mostly elderly people around the country of millions of dollars were sentenced Friday to one to six years in federal prison. In sentencing the men, who operated one of the largest boiler-room scams federal authorities have shut down, U.S. District Court Judge Alicemarie H. Stotler described the vulnerability of the victims who lost an estimated $15 million.

Video Phone Promoter Charged With Fraud: The Orange County defendant, who continued soliciting investors after he was jailed for contempt of court, was charged with 30 counts of criminal fraud and money laundering. The federal grand jury indictment, handed down in Los Angeles, alleges that Michael Gartner, 32, masterminded a $12-million securities fraud by selling hundreds of shares in a nonexistent video phone system he said would link major business centers in Los Angeles and Orange counties.

Four telemarketing salespeople were convicted Tuesday by a federal jury in Santa Ana for their roles in a scheme that defrauded more than 500 investors across the country of almost $5 million. The jury convicted Stephen James Stapleton of Dana Point, Jon William Long of Long Beach and San Diego, Nancy Ann Klatter of Costa Mesa and Robert Edwin Perkins Jr. of Newport Beach of 17 counts each of mail and wire fraud. Long was convicted of an additional count of mail fraud.

Government agents raided the homes Wednesday of two former executives at DFJ Italia, a bankrupt Orange County investment firm under investigation for allegedly bilking investors out of nearly $35 million. The early-morning raids marked the first official confirmation that the FBI is probing the Irvine firm, which collapsed earlier this month amid charges of fraud.