Three Indicted on Charges of Running Stock Swindle
Three men have been indicted in an alleged telemarketing swindle that lured investors across the country with false promises of access to initial public stock offerings, the U.S. attorney’s office said Wednesday.
David Allan Colvin, 56, of Chatsworth; John Larson, 50, of Beverly Hills, and Aldo Tarallo, 65, of Rancho Mirage each were charged with 25 counts of securities and mail fraud.
Colvin, who allegedly headed the Canoga Park-based telemarketing operation, also was accused of money laundering.
Assistant U.S. Atty. Randall Lee said the IPOs were never issued. He estimated investor losses at $6.2 million.
Among the companies in which the trio allegedly solicited investments was one that was supposed to have developed a guide to adult entertainment sites on the Internet.
Another company was purported to have the exclusive rights to sell Sears Craftsman tools, Sears Die Hard batteries and Quaker State Motor Oil in Italy.
A third was said to have developed a system, approved by the Food and Drug Administration, that could detoxify a person on drugs or narcotics within 15 minutes.
The telemarketers also touted investments in a nationwide chain of weight loss clinics, falsely claiming that it had the backing of former Surgeon General C. Everett Koop and television news anchor Tom Brokaw, the indictment said.
In addition to controlling the companies into which investments were made, Colvin was accused of establishing a bogus firm called Wall Street Research Co., which claimed to be in the business of preparing independent stock analyst reports.
The reports offered glowing recommendations to buy stock in the companies that Colvin and his telemarketers promoted.
Colvin and Larson have been in federal custody since August, when they were held in contempt of court in a civil action brought by the Securities and Exchange Commission.
The SEC filed suit against Colvin, Larson and two other men in 1998, alleging that they obtained several million dollars from unsuspecting investors over a one-year period.
U.S. District Judge Alicemarie H. Stotler in Santa Ana ordered Colvin to surrender $939,459 and Larson, $224,513 of the money taken from defrauded investors. When they failed to do so, she found them in contempt and ordered them jailed.