2 Arrested in Alleged Investment Fraud

The FBI arrested two Westlake Village men Tuesday on suspicion of defrauding investors out of $68.7 million -- funds they allegedly used to buy luxury homes, cars, yachts and jewelry.

Robert Coberly Jr. and Curtis Somoza, both 38, told investors that they could earn 25% returns each year and ultimately get back five times their initial investments in a life insurance scheme that also was supposed to pay death benefits to church members in Watts and Compton, federal officials alleged.

In a 79-page affidavit, FBI Special Agent Peter R. Conroy said the pair purchased two pools of life insurance policies as investments for $4.7 million but allegedly squandered an additional $64 million on personal expenses. Somoza also transferred about $9 million in investor funds to unrelated businesses, said Assistant U.S. Atty. Matt Sloan, who filed a criminal fraud complaint in U.S. District Court in Los Angeles.

U.S. Magistrate Judge Charles F. Eich ordered Somoza and Coberly held without bail pending further hearings, Sloan said. Somoza’s lawyer, assistant public defender John Littrell, and Coberly’s attorney, Alan Rubin of Los Angeles, couldn’t be reached for comment.

The Securities and Exchange Commission had sued Coberly and Somoza in September 2004, alleging that they swindled investors out of $6.7 million by promising returns of 120% on so-called prime bank notes. To settle that suit, the duo repaid investors with the proceeds of another alleged fraud, a supposed bond-trading program, federal officials said.

In all, about 70 investors were victimized from 2003 through this year, including an 81-year-old businessman who put in $25 million, Conroy said in his affidavit.

The FBI, postal inspectors and federal tax agents early Tuesday searched Coberly’s $4-million house in Westlake Village, which authorities alleged was purchased in part with funds from the prime bank scheme. Authorities also searched Somoza’s 27,000-square-foot Westlake Village house, located on a 16-acre parcel, which he allegedly purchased for $17 million using $3 million in investors’ funds as a down payment.