O.C. Man Ordered to Pay $5.8 Million in Money Scam
A Newport Beach man has been ordered to repay $5.8 million to investors who were promised they could double their money in 90 days by purchasing U.S. currency at less than face value, the U.S. Securities and Exchange Commission said Thursday.
Federal regulators said Rudolf Alexander Victor Linschoten, 61, of Newport Beach and Marshall Neil Craig Ronald defrauded 170 investors nationwide by luring them to investment seminars on cruise ships and convincing them to invest in a Bahamas-based company, Sabre Asset Management Corp.
The men contacted their investors through Irvine-based Investors International, which is controlled by Linschoten but not named in the complaint, said Joel Kornfield, the SEC attorney handling the case.
Last month, both men were indicted by a federal grand jury on securities and mail fraud charges. Linschoten was arrested in Florida and arraigned in U.S. District Court in Santa Ana earlier this week. Ronald is in the United Kingdom and federal attorneys are seeking his return.
Paul McKenna, a Florida attorney representing Linschoten, said his client is not guilty and did not personally profit from the investment scheme. McKenna said Linschoten is a lecturer and seminar leader who invited Ronald to speak at several of his investment and motivational seminars.
“[Ronald] is the person behind the fraud,” McKenna said. “[Linschoten] was not aware it was a fraudulent operation.”
Attorneys for Ronald could not be reached for comment.
On Tuesday, a federal judge in Los Angeles granted a default judgment to the SEC and ordered the men to repay $5.8 million, plus interest.
Kornfield said government investigators already have located about $2.5 million in company funds and are optimistic about recovering more for investors.
According to the SEC complaint, Linschoten and Ronald diverted most of the money to offshore bank accounts or used it to buy cars, guns and other personal items.
The men are accused of operating the scheme from December 1996 through October 1997. They attracted investors by offering seminars on cruise ships to such places as the Bahamas, Ensenada and Aruba.
Investors were told they could earn 100% “risk-free” returns by pooling their funds together and purchasing--through a bank--U.S. currency from the Federal Reserve Bank at less than face value. Then, investors were told, they could resell the money for a profit, Kornfield said. Such scams also have been referred to as “prime bank” or “bank trading” offers.
“These schemes are totally fictitious,” Kornfield said. “There is no truth to any of it.”
