Trio in Scam Sentenced to Stiff Terms : Courts: A Laguna Hills salesman and two others were part of a boiler-room fraud that stole millions from investors.

A Laguna Hills man who was the top salesman in a boiler-room scam that defrauded 1,100 investors out of $11.4 million in the mid-1980s was sentenced Friday to 4 1/2 years in federal prison. Two of his four cohorts also were given stiff terms.

Alexander D. McCord, 47, was also ordered to serve five years of probation after his prison term ends. In addition, he was told to pay $101,000 in restitution for his role in selling worthless investments in precious metals through the now-defunct Capital Trust Inc. in Irvine.

U.S. District Judge J. Spencer Letts also sentenced Capital Trust’s president, James H. Harvey Jr., 50, to eight years in prison and five years of probation, and ordered him to pay $54,000 in restitution. Harvey, formerly of Mission Viejo, now lives in Woodland in Yolo County.

The judge sentenced Randle W. Villa, 37, of Costa Mesa to six months in jail and five years of probation, and ordered him to pay restitution of $31,000. Villa was Capital Trust’s vice president.

“We consider the sentences to be a very good result,” said Jeffrey Isaacs, the assistant U.S. attorney who prosecuted the case. McCord’s term, he said, “is one of the larger sentences for a telemarketing salesman in this district.”

“The judge made it clear that these were serious crimes and that the sentences were intended both to punish them and to send a message to other people who might think of participating in these boiler-room scams, whether they’re presidents or salesmen,” the attorney said.

Capital Trust, which had offices in Newport Beach, El Toro and San Diego, was a highly sophisticated telemarketing fraud. The company declared bankruptcy in November, 1986, and was shut down by state and federal authorities two months later. Complaints from clients prompted a joint federal and state task force to investigate.

The federal indictment charged that the defendants sold investments in gold, silver and other precious metals by telling clients that the investments were insured and that their money would be placed in separate accounts.

In fact, the investments were uninsured and worthless. Clients’ money was used instead to finance the lavish lifestyles of Capital’s executives, prosecutors said. Many of those who lost money were elderly and of limited means.

Prosecutors said McCord was Capital’s leading salesman, generating $3.5 million in business between 1984 and 1987 and earning about $240,000 in commissions. The only one of five defendants to take his case to trial, he was convicted by a jury on June 15 on eight counts of fraud and one count of falsifying his income-tax return.

Harvey took in about $600,000, of which $108,000 was embezzled from client accounts and diverted to a secret bank account, Isaacs said. Harvey had pleaded guilty to two fraud counts and testified against McCord as part of his plea bargain.

A saleswoman, Dorthea Tomczyk, 37, of Garden Grove, pleaded guilty two years ago to one count of wire fraud. Letts sentenced her Monday to six months in jail and 4 1/2 years of probation, and ordered her to pay $20,234 in restitution.

Capital Trust’s former owner, Richard O. Kelly Sr., is scheduled to be sentenced Sept. 8 on his guilty pleas to three counts of mail fraud and one count of wire fraud. Kelly, 58, now a mortgage broker in Phoenix, agreed in April to repay $2.9 million that he embezzled from clients.

Isaacs said Kelly has been making payments but would not reveal the amount paid so far.