Man Seized in $1-Million Stock Embezzlement

A one-time stockbroker was arrested in Costa Mesa Thursday on suspicion of embezzling more than $1 million worth of stocks and bonds from an 80-year-old San Jacinto woman who had been his client, authorities said.

Steven Michael Sullivan, 43, was arrested near his Orange County apartment. He was charged on a 42-count felony complaint, which includes 6 counts of grand theft, 6 counts of embezzlement and 30 counts of securities violations in connection with the alleged bilking of Margaret Van Luven, a retired schoolteacher who inherited much of her wealth.

The complaint was filed in Hemet Municipal Court by the Riverside County district attorney’s office.

Sullivan allegedly borrowed money on Van Luven’s securities to finance, among other things, an Irvine business magazine that folded last January after three years. He was also charged with suspicion of carrying a loaded firearm in his vehicle, authorities said.

Sullivan was being held at Costa Mesa Jail on $500,000 bail. Henry P. Rupp, the county prosecutor handling the case, said bail was set high because “Sullivan is a flight risk.”

Sullivan is a former official with J. David Securities, which was headed by convicted financial swindler J. David Dominelli. Sullivan’s attorney, Fred Warner, said the problem stems from “a misunderstanding.”

“This is a . . . lady whose memory is starting to fade,” Warner said. “She consented to signing those (notarized) documents in full awareness and in front of witnesses. . . . She knew what she was doing and a year later decided that might not have been a good decision.”

According to the affidavit in support of the warrant, Van Luven hired Sullivan as her stockbroker in 1979. During the next several years, Sullivan did his trading at a number of brokerage firms, including Smith-Barney of Newport Beach, the affidavit said.

On March 26, 1983, Van Luven entered Hemet Valley Hospital, where she was treated for severe anemia, the affidavit said. The same day, Sullivan had her sign a document giving him power of attorney over her financial affairs, including access to her “safety deposit boxes, checking account, real estate, stocks and bonds and securities,” the affidavit said.

The affidavit also said that below her signature on the document was a paragraph that read: “I give to Steven M. Sullivan all my municipal bonds and all my gold, all my stocks and all securities as a gift forever.”

“Mrs. Luven does not remember signing this document,” Rupp said. “She was ill and disoriented at the time.”

Request Made

Rupp said when Van Luven was released from the hospital she asked Sullivan to return the securities, which Sullivan allegedly used as collateral to borrow money used to finance his Liberty Street Chronicle magazine, as well as for his own personal use.

Sullivan paid her dividends of $3,000 each month, with the promise that the magazine would soon produce additional profits, Rupp contended.

Van Luven has also filed a civil lawsuit in Orange County Superior Court seeking millions of dollars in damages from Sullivan and other defendants, including J. David Securities, where Sullivan worked as a senior vice president in the firm’s Newport Beach office.