Sentencing of Newport Beach financier John G. Rinaldo, who pleaded guilty to a federal fraud charge earlier this year, has been postponed until May 22 at his attorney’s request.
Rinaldo faces a maximum sentence of five years in prison and a $1,000 fine after entering a negotiated guilty plea Feb. 27 to a single felony count of mail fraud in connection with the 1982 collapse of his retirement-fund investment business.
About 7,000 Southern California investors in Rinaldo’s bankrupt pension-fund management and real estate investment program may have lost up to $10 million, according to the bankruptcy trustee in the case.
Rinaldo owned American Home Mortgage Corp. and Western State Pension Corp., both based in Costa Mesa. Rinaldo was charged with concealing from investors the close links between the two companies; with illegally using pension funds managed by Western State to finance speculative real estate loans made by American Home, and with using money from later investors to pay interest into the accounts of earlier investors.
Richard Kirschner, Rinaldo’s Los Angeles attorney, was out of the country and unavailable for comment Monday.
In a Feb. 28 interview with The Times, Kirschner maintained that Rinaldo did not steal money from investors. Kirschner said the $40 million collected by liquidating Rinaldo’s assets is enough to repay all investors.
However, bankruptcy trustee Dennis Schmucker contends the investors put more than $50 million into Rinaldo’s companies. During his court appearance in February, Rinaldo read a statement saying he had not intentionally tried to defraud investors but had “shown reckless disregard for the truth” by failing to disclose the ties between the two supposedly separate companies.
Chief Assistant U.S. Atty. Richard Drooyan said Monday that the government initially charged Rinaldo with 15 counts of mail fraud, but agreed to “accept a plea to one count to encompass all the schemes.”
He said Kirschner asked for the sentencing to be postponed so he could review the probation reports submitted in the case.