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Tag: U.S. Attorney André Birotte Jr.

  • FEDS: Former California National Guard Base Commander Timothy Melvin Murphy Pleads Guilty To Bilking $2.7 Million In Ponzi And Fraud Caper

    The onetime commander of the California National Guard base in Los Alamitos has pleaded guilty to mail fraud in a Ponzi scheme that defrauded 28 investors of $2.7 million, federal prosecutors said.

    Ret. Col. Timothy Melvin Murphy, 70, of Orange, ran his investment scam through an entity known as Capital Investors Inc., also of Orange, the office of U.S. Attorney André Birotte Jr. of the Central District of California said.

    In pleading guilty yesterday, Murphy admitted that he made materially false promises to clients, offered fraudulent investment opportunities to certain of his clients, and that he created and used a variety of false documents to execute the scheme,” prosecutors said.

    The FBI investigated the case.

    As the probe unfolded, investigators discovered that Murphy sometimes offered “guaranteed” returns, misdirected investors’ money and “created false account statements to mislead his clients into thinking that their money was properly invested and generating the promised income.”

    But the former officer “did not use the clients’ investment funds as he promised he would — an investors got plucked for $2.7 million, prosecutors said.

    Sentencing before U.S. District Judge David O. Carter is preliminarily set for June 25. Murphy faces up to 20 years in federal prison, a substantial fine, a restitution order and supervised probation after getting out of jail, prosecutors said.

    Murphy now joins a growing list of convicted or accused Ponzi schemers in their senior years.

    In Rhode Island yesterday, Martin B. Feibish, 81, of Providence, pleaded guilty to mail fraud in an alleged Ponzi swindle that lasted 10 years and plucked $5 million from a single victim.

    The Orange County Register is reporting that prosecutors believe Murphy’s scam in California began as early as 2001.

    Federal prosecutors in Rhode Island said the Feibish scheme also dated back to 2001.

  • BULLETIN: California Woman Pleads Guilty In ‘Christian Rock Concerts’ Ponzi Scheme; Recidivist Swindler Lauren Baumann Used Money From Latest Scam To Pay $10,000-A-Month Mansion Rent, Prosecutors Say

    BULLETIN: A California woman has pleaded guilty to wire fraud in a Ponzi scheme in which investors were falsely told their money was being used to fund “Christian rock concerts” and to flip real estate at a profit.

    Lauren Baumann, 43, of Downey, was a recidivist  huckster who failed to disclose she’d been sued for fraud by the SEC in 1998 and convicted in Texas of securities fraud in 1999 in a criminal case that evolved from the SEC probe. The 1990s-era caper gathered about $5 million, and the scam targeted at Christian music fans that would follow later netted about $1 million.

    Investors in the rock-concert scam were told their money would be used to finance “battle of the bands” events that would feature “Christian rock bands and other music groups that would generate profits from ticket sales and company sponsorships,” the office of U.S. Attorney André Birotte Jr. of the Central District of California said this afternoon.

    The scheme operated through a company known as Stewardship Estates LLC, prosecutors said.

    “Baumann also used investor funds to pay approximately $10,000 a month to rent a historic mansion in Downey and to pay private school tuition for her children, among other personal expenses,” prosecutors said.

    Although some of the investors got paid, the money they received was Ponzi proceeds. All in all, the scam sucked in more than two dozen investors and caused at least $560,000 in losses, prosecutors said.

    Baumann faces up to 20 years in federal prison. She is scheduled to be sentenced by U.S. District Judge Josephine S. Tucker on Dec. 12. The FBI handled the criminal probe in Baumann’s latest swindle.