2 Sentenced for Bilking Investors in Metals Firm

Two men have been sentenced to prison for bilking investors in a now-defunct Newport Beach precious-metals company of $10 million.

A federal judge in Los Angeles on Monday sentenced Harold Lazerman, 59, to seven years in prison plus five years of probation. Lazerman’s stepson, Danny Paul Facella, 33, of Palm Desert, received a five-year prison sentence plus five years of probation. Both were ordered to repay investors, according to the U.S. attorney’s office.

Lazerman, a former Newport Beach resident who was the president and sole owner of Investment Metals International Inc., was convicted in June, 1991, on 29 counts of mail fraud from 1983 to 1986. Facella, who acted as regional sales manager for IMI, was convicted of 13 counts of fraud.

From 1980 to 1987, IMI solicited about 1,000 investors from 30 states by making a variety of false claims. Investors were told, for example, that they were buying bars of gold and silver that IMI would hold in its vaults for them and that their funds would be held in separate accounts for their exclusive use. Instead, evidence showed, Lazerman used the money to speculate in the commodities market for himself. From 1983 to 1985, Lazerman and Facella lost $10 million of the $18 million they had collected from investors.

Customers were also told that IMI had been in business since 1974 and that it had a seat on a commodities exchange, although it had none.

“We were very pleased with the sentencing,” said Frank Shults, spokesman for the U.S. Justice Department in Washington. Precious-metals fraud schemes tend to concentrate in a few judicial districts, Shults said, among them Los Angeles, New York and Miami.

In the past, unlicensed dealings in precious-metals securities were handled as civil violations of the Commodity Exchange Act of 1974. Since the late 1980s, however, there has been a federal crackdown on such operations and a shift to criminal prosecution of unlicensed dealers.

Attorneys for Lazerman and Facella could not be reached Wednesday for comment.

Lazerman has also been convicted of two counts of attempting to evade income-tax payments, and Facella has been convicted of two counts of failing to file income-tax returns.