Thaindian News

SANTA ANA, CALIFORNIA (BNO NEWS) – An Orange County, California resident on Wednesday was sentenced to over 10 years in federal prison for participating in a Ponzi investment scheme with an Orange County attorney that claimed more than $61 million, prosecutors said on Thursday.

The Ponzi scheme collapsed and caused approximately 140 investors to suffer more than $20 million in losses. James Halstead, 63, of Tustin, was sentenced late Wednesday night by a U.S. District Judge. In addition to the prison term, the Judge ordered Halstead to pay $14,525,993 in restitution, which represents the amount of losses directly attributed to Halstead.

In September 2009, Halstead pleaded guilty to wire fraud and mail fraud, admitting that he worked with an Irvine attorney, Jeanne Rowzee, 50, to reassure victims who thought they were investing in public investments in private entities (PIPEs) and money market programs. Halstead and Rowzee falsely promised returns of 25 percent to 35 percent every three to four months.

Halstead and Halstead solicited investments in PIPEs as short-term bridge loans to companies that were in the process of obtaining equity financing for growth. Victims were told that their money would be used to fund the short-term loans, and Halstead and Rowzee claimed they had never lost money in this type of investment. Halstead and Rowzee told victims that Rowzee was an experienced securities attorney and had previously worked for the Securities and Exchange Commission.

However, the victims’ money was never invested. Halstead and Rowzee instead used the money to make Ponzi payments to some investors and to support their lavish lifestyles. According to court documents, Halstead used $191,005 of victim-investors’ money to buy a Ferrari, more than $1 million to purchase a home for himself in the Las Vegas area, and $162,350 to buy a Porsche.

When Halstead pleaded guilty last fall, Halstead also admitted defrauding a Newport Beach man by offering phony investments in insurance premium funding. Instead of using the money to fund insurance premiums for third parties, Halstead used the money for his own enrichment.

When she pleaded guilty in October 2008 to conspiracy and securities fraud, Rowzee admitted that the PIPEs scheme was a fraud, and that claims to investors – regarding the existence of the PIPEs, her experience as a securities lawyer, that she personally performed due diligence on each PIPE, and that they had never lost any money – were false.

The case is the result of an investigation by the Federal Bureau of Investigation and the Securities and Exchange Commission.