Northridge : Ex-Broker Pleads Guilty to Fraud

A Simi Valley man has pleaded guilty to defrauding 31 people, including his parents, of $800,000 while he was employed as a stockbroker in Northridge.

Michael Daniel McFadden, 41, entered a guilty plea in U. S. District Court in Los Angeles to three counts of securities fraud and one count of mail fraud. McFadden, who is free on recognizance until his sentencing in January, faces a maximum penalty of 20 years imprisonment and fines of up to $1 million.

McFadden worked for five years at Dean Witter Reynolds Inc.’s Northridge branch on Tampa Avenue, where he defrauded customers from the spring of 1989 to the spring of 1991, said Harriet M. Rolnick, the assistant U. S. attorney prosecuting the case.

McFadden left the firm in March, 1991, when he reported his diversion of funds to his supervisor, said McFadden’s attorney, Vincent LaBabera. He was not charged until Monday and entered his plea that day.

As part of his scheme, McFadden prepared false documentation authorizing withdrawals of funds from accounts, Rolnick said. Checks were issued in customers’ names, although customers never saw them, she said.

McFadden used the money to pay off gambling debts, his lawyer said.