Santa Ana Man Is Accused of Investment Fraud : Indictments: Three people allegedly bilked 450 investors of about $22 million for Tustin seafood company, officials say. The operation, which paid some dividends, reportedly operated like a Ponzi scheme.
A Santa Ana man and two founders of a Tustin company were indicted on federal charges that they bilked more than 450 investors of an estimated $22 million by saying the money would be used to run a seafood company which sold to major grocery chains, according to court records unsealed Tuesday.
Thomas Grahovac, 48, was arrested at his home in Santa Ana on Monday. Also arrested Monday were Joy Lynn Bouwkamp, 61, of Oregon, and Joe Lee Hallock, 45, of Kansas, both founders of B.H. Rothchild & Gray of Tustin. Grahovac was president of the company.
According to the indictment, the defendants led investors to believe that their money went into a seafood distribution and processing company called Ocean Best Seafood. The three told potential clients that Ocean Best did business with large grocery chains such as Safeway, Albertson’s and Alpha Beta, according to the indictment unsealed in federal court in Santa Ana.
“The grocery stores never purchased Ocean Best Seafood products,” said FBI Agent Mike Anderson, the supervisor handling the case.
Investors also were told that the company owned a fish processing plant in San Diego and two fishing ships, the “Isabel” and the “Yoko Maru.” But according to the indictment, none of that was true.
To keep the operation going, the defendants made interest payments to investors with money from new investors in a kind of Ponzi scheme, according to the indictment.
“This was done to create a false impression that the funds had been going into that particular business,” Anderson said.
After interest payments were made to investors, who were mostly from California, Washington and Canada, the money left over was spent on the defendants’ personal expenses, ranging from down payments on homes to a Steinway piano, Anderson said. The defendants also bought a mining company, a movie production company and a citrus farm, he said.
“The money never went into that particular business,” Anderson said.
The case took more than two years to unravel, Anderson said. FBI investigators went through about 200 boxes of financial records and company computer equipment seized at the Tustin office in early 1993 after receiving tips from disgruntled investors and suspicious company officials, according to the FBI.
At the time, Grahovac had told investors that he was a special agent of the FBI, according to the indictment. He even wrote to the investors who lost money and asking them to be patient because he would work to turn the company around.
In an interview with The Times after the company’s records were seized by the FBI, Grahovac said, “The FBI is doing me a big favor.”
The U.S. attorney’s office said in a statement released Tuesday that the defendants’ fish processing business “operated for a short time, continually lost money and sold to small local restaurants rather than large grocery chains.”
According to the indictment, Grahovac was convicted of forgery, possessing a bad check or money order and grand theft of property prior to the indictment.
“You can’t go by what he says alone,” Anderson said. “You’ve got to look behind his actions.”
The three are charged with conspiracy, mail fraud, wire fraud, securities fraud, money laundering and criminal forfeiture.
Bouwkamp and Hallock are charged in all 43 counts of the indictment and each face a maximum sentence of 355 years’ imprisonment and a fine of at least $12.75 million if convicted of all counts. Grahovac was charged with 14 counts and faces a maximum sentence of 90 years’ imprisonment plus a fine.
An arraignment has been set for later this month.