Four Orange County residents operating as the Ostrich Group Inc. duped investors out of $800,000 in a bird-breeding scheme, the Securities and Exchange Commission contended in a lawsuit filed Tuesday.
Investors were told the money would be used to buy breeder ostriches and sell the offspring, "generating substantial cash-flow revenues in a very short while," the SEC said in its complaint, filed in U.S. District Court in Los Angeles.
The SEC said Ostrich Group's pitch was: "You own--we board, sit back and watch your empire grow." The company guaranteed each breeding ostrich would produce 20 eggs per breeding season, the agency said.
But the suit contends the proceeds mostly feathered the defendants' nests from late 1995 through June 1997.
"There were supposed to be 247 birds, and there were two," said Lisa A. Gok, assistant director of the SEC's Los Angeles office.
The civil suit names Patrick L. Antrim of Dana Point, his mother, Loretta Antrim of Irvine, David Hudson III of Santa Ana and Michael S. Whitney of Mission Viejo.
All were officers or directors of Ostrich Group. Patrick Antrim and Hudson each owned 50% of the company.
Alban P. Silva, the Antrims' lawyer, said he hadn't seen the suit and declined to comment on its details. Silva said he had hoped to resolve the case without a formal suit, but he couldn't agree with the SEC on sharing documents.
Attorneys for Hudson and Whitney couldn't be contacted.
The suit accuses the four of misrepresenting the venture while selling contracts to 83 investors in three states. The company promoted itself in newspapers and on radio, television and the Internet.
The suit, alleging fraud and sale of unregistered securities, seeks the return of all profits from the scheme, with interest, and a permanent injunction preventing the four from violating federal securities laws.
The Antrims and Hudson have a history of run-ins with regulators.
They previously were targeted by the California Department of Corporations, which ordered them in December 1996 to stop selling unregistered securities for the sale and boarding of ostriches.
In June 1993, the U.S. postal inspector issued a cease and desist order against the Antrims, prohibiting them from making fraudulent representations about their ability to repair individuals' credit histories.