Orange County financier John Rinaldo, sentenced last May to three years in federal prison for fraud, is asking a federal judge to reduce his sentence so he can help 7,000 investors in his defunct companies try to recover millions of dollars.
A hearing on Rinaldo’s request is scheduled for 10:30 a.m. today before U.S. District Judge Terry Hatter in Los Angeles federal court.
Chief Assistant U.S. Atty. Richard Drooyan said Thursday that the government opposes Rinaldo’s request for a new sentence. According to the government’s motion filed late Thursday, “the sentence was appropriate when originally imposed by the court and remains appropriate at this time.”
Sentence Begins Oct. 30
Rinaldo is scheduled to begin serving his sentence on Oct. 30.
The motion said “the case involved a substantial fraud perpetrated by a sophisticated white-collar defendant, which mandates a prison sentence.”
Last March, Rinaldo pleaded guilty to one count of mail fraud in connection with the operation of his Costa Mesa-based American Home Mortgage Corp. and Western States Pension Corp.
American Home Mortgage’s court-appointed trustee estimated that 7,000 Southern California investors lost about $11 million when Rinaldo’s financial empire collapsed in 1982.
Craig Lytle, an attorney representing investors in a class-action lawsuit against Rinaldo and his companies, said he fears the losses may be closer to $20 million.
Lytle said he supports Rinaldo’s motion for a reduced sentence because Rinaldo has agreed to help investors try to collect about $40 million from insurers of defunct Heritage Bank, where Rinaldo’s companies deposited investors’ money. Lytle contends that Heritage and other financial institutions had a responsibility to protect the pension funds from Rinaldo’s fraudulent dealings.
Richard Kirschner, Rinaldo’s attorney, called Lytle’s support “a dramatic turnaround.”
Kirschner said Rinaldo did not cooperate with investors prior to his sentencing because doing so might have jeopardized his Fifth Amendment rights against self-incrimination.