Santa Ana Man Faces Prison Following Ponzi Scheme
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 Ponzi scheme.
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.