O.C. man loses insurance license

State insurance regulators have revoked the license of Santa Ana agent James R. Halstead, who is being held without bail on charges that he bilked investors of millions of dollars and spent the money on a high-flying lifestyle.

Halstead, 61, was indicted last month on federal wire fraud, mail fraud and money-laundering charges stemming from an alleged scheme in which he and Irvine securities lawyer Jeanne M. Rowzee scammed $22 million from investors, including wealthy developers and retirees on fixed incomes.

The pair promised to put the money in securities known as private investment in public equity, or PIPEs, and touted returns of as much as 40% in as little as three months, according to prosecutors and civil lawsuits.

Instead, they allegedly pocketed the cash, with Halstead accused of blowing millions of dollars on exotic sports cars, homes in Las Vegas and expensive gifts for a mistress.

Under California law, the insurance commissioner can revoke the license of an agent convicted of a felony. Halstead has yet to be tried on the pending federal charges, but regulators were able to take his license anyway after learning about a previous conviction when they were “contacted about the pending Federal indictment,” according to the revocation order.

In 1998, Halstead pleaded guilty to five felony counts after he and another man were charged with taking more than $1 million from investors in a scheme to sell crude oil and German bank shares, O.C. Superior Court records show.

Halstead was placed on probation.

His lawyer, Michael Molfetta, on Thursday called the revocation “piling on” and blasted regulators for citing a 10-year-old conviction to lift a license his client had held since 1985.

“It sounds pretty typical of the Department of Insurance, which is, let’s just say, so mediocre at their job,” he said. “Something that is so bad that it gives rise to revocation of a license -- how ridiculous is it that it took the Department of Insurance so long to figure it out? It’s a joke.”

After Halstead pleaded not guilty to the current charges last month, U.S. Magistrate Judge Arthur Nakazato ordered him held without bail until trial. Nakazato called him a flight risk, citing a judgment won recently by investors in civil lawsuits.

“Defendant has nothing to lose by fleeing because he has a $66-million civil judgment against him and is facing a prison sentence of approximately 10 years if convicted,” Nakazato wrote in his detention order.

He also noted Halstead’s mental health and erratic behavior.

“Defendant’s admitted depression, history of using illegal drugs and daily drinking habit indicate that [he] is mentally unstable and unlikely to comply with conditions of release,” Nakazato wrote.

Halstead’s trial, scheduled for Nov. 18, is likely to be delayed, Molfetta said.

Rowzee, 49, was charged in June with conspiracy and securities fraud. She struck a plea agreement, which was filed under seal, and is free on $40,000 bond, according to court records. She also agreed to pay $66 million in damages in civil suits.

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kim.christensen@latimes.com