Fraud Investigators Raid Anaheim Loan Company

Responding to complaints from customers, fraud detectives raided an Anaheim company that allegedly collected fees for loans that never materialized, Anaheim police said Monday.

Detectives armed with two search warrants seized a truck full of records Friday from Grubstake International Inc. at 1601 E. Orangewood Ave.

Deputy Dist. Atty. Guy Ormes will review the records and determine whether to file charges against company officials, according to Anaheim Police Detective Dale Walters.

The owners of the company “purported to be venture capitalists,” Walters said.

Grubstake, which advertised in The Times and the Wall Street Journal, promised to obtain loans in return for fees ranging from $500 to $20,000, Walters said.

“I interviewed at least 10 people (who paid fees), and they had not funded anyone,” Walters said. He said customers also had tried and failed to get their money back.

John Ball, vice president of Grubstake, said Monday that the raid was a surprise.

“They’ve put us out of business temporarily,” Ball said. “They took everything.”

He described the 2-year-old company as a “financial services organization” designed to help people start new ventures. When asked what kinds of companies Grubstake had assisted, Ball said he could not say exactly.

He said Grubstake has about 50 clients and charged fees ranging from $2,500 to $15,000.

“We asked for a retainer of half the costs to put the deal together,” said Ball, adding that the company did not guarantee financing.

Records seized by police indicate that as many as 200 customers might be involved, but Walters said he did not know how much money Grubstake has collected.

“People came to us and began complaining in early 1985,” he said. Walters said the Anaheim Police Department’s fraud unit began working on the case full time last August.