Former fugitive from Newport convicted of running $3-million Ponzi scheme
A Newport Beach man who fled the country and evaded authorities for years after he was accused of running a $3-million Ponzi scheme was convicted by an Orange County jury Wednesday.
Thomas Franklin Tarbutton, 56, could face up to 34 years and four months in prison for dozens of felonies related to theft, forgery and fraud. He is scheduled to be sentenced by an Orange County Superior Court judge March 4.
Between 2004 and 2010, Tarbutton was what is known as a “hard money” lender, according to the Orange County district attorney’s office.
Through Tarbutton’s company, Villa Capital Inc., private investors could loan funds to borrowers who didn’t want to go through the banking system.
Tarbutton defrauded 11 of those investors who thought they were lending money for real estate mortgagees, according to prosecutors.
Instead of funding those loans, Tarbutton would keep the money and show the investors fake or forged documents that showed they were lienholders on properties in Los Angeles and Orange counties, prosecutors said.
To keep clients from finding out their investments were underperforming — or the loans were never made in the first place — Tarbutton would pay out small amounts he described as interest from the loans, when they were really money from the original investments, according to prosecutors.
When the real estate market crashed, Tarbutton stopped making payments at all, according to the district attorney’s office.
Prosecutors said four investors reported suspicions of fraud in October 2010, and a year later, authorities charged Tarbutton and issued a $2 million warrant for his arrest.
Tarbutton fled the country and began living in Brazil, according to authorities.
In December 2014, Tarbutton flew to Panama, but when he tried to cross the border to Costa Rica, Panamanian authorities detained him on the warrant, prosecutors said.
Tarbutton was returned to the United States three days later and the FBI took him into custody at Los Angeles International Airport, prosecutors said.
Tarbutton pleaded not guilty to the charges but was ultimately convicted of 18 felony counts of grand theft, nine felony counts of forgery, 11 felony counts of using an untrue statement in the purchase or sale of a security, and one felony count of use of a device or scheme to defraud.
The jury also found him guilty of sentencing enhancements for loss of over $100,000, property loss over $3.2 million and aggravated white collar crime of over $500,000.
