O.C. man gets 27 years in investor fraud

An Orange County man who posed as a successful sporting goods entrepreneur has been sentenced to 27 years in federal prison after admitting to a complex fraud that prosecutors said cost more than 2,000 investors $55 million.

Before his arrest in 2005, Colin Nathanson was president of Giant Golf Co., also known as Play Big Enterprises Inc., which marketed golf clubs and accessories. He pleaded guilty last year to mail fraud and was sentenced Tuesday by U.S. District Judge Cormac Carney in Santa Ana.

In admissions to the court, Nathanson acknowledged that he misled investors in his Nathanson Investment Trust into thinking they were buying ownership in a privately held Internet-based company.

Prosecutors said he represented that the company was about to conduct an initial public offering, then changed the pitch and claimed instead that it was in merger talks with a large public company.

In fact, Nathanson admitted, the private Internet company was fictitious and he used investors' money to keep his money-losing golf companies going and to pay for personal extravagances, including gambling expenses and payments for three houses.

In addition to the Nathanson Investment Trust scheme, which cost investors $28.4 million, Assistant U.S. Atty. Robert J. Keenan said, Nathanson also admitted to fraudulently inducing investments in various other projects, including an Internet-based casino, based on false claims that the investments paid 2% to 5% per month.

The Securities and Exchange Commission had his assets frozen in 2004, but by then the vast majority of the investors' funds had disappeared.

Nathanson, 62, who lived in Coto de Caza before his arrest, was the subject of cease-and-desist orders issued by state securities regulators in California in 1994, Ohio in 2002 and North Dakota in 2004. His scams cost victims a total of about $55 million, Keenan said.

Prosecutors told Carney the minimum sentence under federal advisory guidelines was about 24 years; Nathanson's attorney from the federal public defender's office argued that such a penalty was excessive and said five or 10 years was appropriate.

In handing down the 27-year sentence, the judge said that it was in the middle of the range suggested by the sentencing guidelines and that the victims of the financial crime had been seriously harmed.

Carney has a reputation for giving tough sentences to white-collar criminals. Three years ago, he sentenced Orange County money manager James P. Lewis Jr. to 30 years in prison for swindling 1,600 investors out of $156 million in a Ponzi scheme so calculated and long-running that the judge called it a "crime against humanity."

Last year, Carney rejected a plea agreement between Broadcom Corp. co-founder Henry Samueli and prosecutors that would have given the Orange County billionaire, who owns the Anaheim Ducks, probation for lying to the SEC about his alleged role in the backdating of stock options issued by the Irvine computer chip company.

Broadcom's other founder, Henry T. Nicholas III, and former Chief Financial Officer William J. Ruehle have pleaded not guilty in the case. Carney said he wanted to see how the evidence played out in their cases before deciding whether Samueli should escape time behind bars.



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