Civil Counts Added in Alleged Ponzi Case in Tustin

Securities regulators filed civil charges Wednesday accusing executives of a former Tustin company of fraud and securities violations in connection with a scheme to bilk 480 investors out of $24 million.

The executives were indicted earlier this year on federal criminal charges that they misled investors by saying the money would be used to run a seafood company that had contracts to supply several large grocery store chains. Authorities said the stores never purchased the products.

The Securities and Exchange Commission filed the action this week against Joy Lynn Bouwkamp, 63, of Oregon and Joe Lee Hallock, 46, of Santa Ana, founders of B. H. Rothchild & Gray, the former Tustin company allegedly set up to recruit investors. The suit also named Thomas M. Grahovac, 48, of Santa Ana, who was chairman and president of the company.

The SEC action seeks to recover millions of dollars allegedly lost by investors from 1990 to 1992 and to bar the three from securities dealings.

Two others, Douglas Laughlin, 35, of Bellingham, Wash., and George Alama, 75, of Hawaii were accused in the lawsuit of selling interests in the company without being registered as broker-dealers.

“This was a classic Ponzi scheme,” said Lisa Gok, assistant SEC regional director of enforcement in Los Angeles. The company “made claims they had boats and contacts which they never had.” She said new investor money was paid to earlier investors, and officers used some invested funds for house payments, private-school tuition and other purchases.