SEC Fraud Suit Names Former O.C. Developer
Former Orange County developer Harold E. Tobin was accused in a federal lawsuit Tuesday of selling unregistered securities and defrauding investors of nearly $5 million in a botched effort to build homes in Las Vegas.
The Securities and Exchange Commission charges in its civil action, filed in federal court in Los Angeles, that Tobin and his Huntington Beach company defrauded 90 mostly elderly investors in the real estate development he called Rancho Mirage.
The SEC action alleged that the investors in 10 states put $4.95 million into Tobin Investment Corp. for the project in the four months before the company’s collapse in early February 1995.
The agency accused Tobin of spending most of the investor money on construction costs for other projects, on interest to previous investors and on undisclosed sales commissions and payments to his firm. The SEC wants the money returned to investors and wants an order enjoining Tobin from violating securities laws in the future.
The lawsuit focuses on the last of at least seven projects that were pending when Tobin ran out of money and shut down operations. Investors have sued alleging that he and his former bankers and contractors conspired to swindle them out of $35 million on various developments.
Tobin, who now lives in the original Rancho Mirage outside Palm Springs, declined to comment on the SEC action. His attorney, Donald Segretti of Newport Beach, wasn’t available, but he said previously that Tobin “got caught in the the downturn in real estate” and did nothing intentionally wrong.
Even so, Segretti acknowledged that his client expected to be indicted on federal charges as well.
Tobin’s wife, Carolyn, said in an interview earlier this year that her husband was more of an investor than a developer and that he relied on three builders and some “bad advice.”
“He’s a naive, gullible guy,” she said of the former USC fullback. “He’s a very honest, trustworthy guy.”
She said that she and her husband lost their entire savings in the collapse of their company and that he has since been working to try to find a way to recover some money for investors.
However, investors aren’t waiting for him. Their lawyer, James J. Seltzer of Emoryville, said Tuesday that he will be going to court within two weeks for an order attaching Tobin assets he said he’s found.
“We’ve identified more extensive assets than were previously believed to have existed,” Seltzer said. Some of the property, he said, was transferred by Tobin to other parties.
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Starting in 1986, Tobin Investment raised funds from individual investors to finance the construction of condominium, townhouse and single-family developments in Southern California and Nevada.
In his last development, the company sold promissory notes secured by interests in deeds of trust issued by the company formed for the Las Vegas project, Rancho Mirage 158. The notes paid interest at 13%, the SEC suit stated.
The company received investments ranging in amount from $5,000 to $91,000. In the last few weeks before it closed, the company collected $400,000, according to the lawsuit.
Though investors were told the money was going for construction of 57 lots, only $1.2 million was used to purchase the lots, the suit alleges.
Most of the rest was transferred as “loans,” the suit contends, to Tobin Investment to pay monthly interest to earlier investors in Rancho Mirage and other projects and to pay construction costs on other projects.
Other amounts were paid to sales agents as commissions and to the company to cover overhead and other costs, the suit states.
