NEWPORT BEACH : Man Held in Alleged $9-Million Scam

Authorities on Thursday arrested a Newport Beach real estate investment executive who along with a partner allegedly netted about $9 million in one of the county’s largest business scams, prosecutors said.

Police arrested David James Cook, 49, shortly before noon Thursday in San Luis Obispo in connection with a warrant issued Monday when the Orange County Grand Jury indicted him on 13 counts of grand theft.

It was unclear late Thursday why Cook was in San Luis Obispo or how long he had been there, authorities said.

Cook and his business partner, Joseph Anthony Veltre, allegedly bilked 13 Orange County lenders and investors, including bankers, dentists and retirees. Authorities allege that Cook and Veltre used their company, American Federal Mortgage Co., to provide investors with falsified documents for the purchase of interests in home mortgages that in some cases had been sold many times over.

Authorities said the ongoing investigation has turned up additional victims and losses since more than a dozen investors brought their complaints of late or missed interest payments to Newport Beach police. The company used the promise of a 15% monthly return on investments to recruit business partners, police said.

Police officers searched the Newport Beach business and said they found documents pertaining to fraudulent transactions and a phony recorder’s stamp used to falsify deeds. A subsequent audit by the state Department of Real Estate uncovered numerous discrepancies and falsehoods in the office files, prosecutors said.

County prosecutors charged Cook and Veltre with grand theft in March. Veltre has pleaded guilty to 28 counts of grand theft and is free on bail, Deputy Dist. Atty. William L. Overtoom said. Veltre is waiting sentencing next month in Orange County Superior Court, and faces up to 13 years in prison.

The district attorney’s office decided to seek an indictment against Cook to speed up judicial proceedings, Overtoom said. With the indictment, prosecutors can avoid a preliminary trial if Cook pleads innocent at his arraignment, expected to be Tuesday or Wednesday.

Cook faces up to 14 years in prison if convicted, including a possible four-year sentence enhancement because Cook’s alleged scam totals more than $2.5 million, Overtoom said.

Cook was being held in lieu of $1 million in San Luis Obispo County Jail, Overtoom said.

This is not the first time that Cook and Veltre landed in legal hot water, court records indicate. Records show that banks and other financial institutions have sought and won court orders to collect thousands of dollars in judgments in about half a dozen legal battles against both men.

Although some were dismissed, the suits contain allegations of financial improprieties, from simple breach of contract to conspiracy.