An investment fraud scam that cost investors $14.5 million dollars has
led to a Santa Ana investment advisor facing more than 10 years in a federal
prison. The man was also ordered to pay $14.5 million in restitution for
his involvement in what is referred to as a
According to reports, in September, James R. Halstead, 63, of Santa Ana,
pleaded guilty to wire fraud and mail fraud in connection to the scam.
Halstead is accused of receiving money from new investors to make payments
for principal and interest to previous investors. This led to the earlier
investors believing that they were receiving returns on their investments.
In his plea agreement, Halstead indicated that he had help from Irvine
attorney, 50-year-old Jeanne Rowzee. Rowzee’s sentencing is scheduled
for December 13, 2010. She pleaded guilty in 2008.
Halstead allegedly received approximately $52.3 million from investors.
Investors were promised a 25 to 35 percent return over a three to four
month period. The phony investments, referred to as Public Investments
in Private Entities or PIPEs, ended up reportedly costing investors $14.5
million. Investors were supposedly told that the PIPEs were short-term
bridge loans for companies that were in the process of seeking equity
financing. Investors were under the impression that their money would
be used to fund these loans.
Though, Halstead returned about $29.5 million to investors, he allegedly
used some of the money to buy a Ferrari, Porsche and a $1 million house
in Las Vegas.