A Newport Beach attorney could face more than five years in prison for running a fake foreign investment operation that netted more about $4.5 million, federal prosecutors said Tuesday.
Gerald M. Shaw, 62, pleaded guilty last week to one count of wire fraud connected to a $300,000 transfer. A victim sent money to his bank account, thinking Shaw would use the cash for foreign security investments.
Shaw has pleaded guilty to only that one instance, which could lead to six months in federal prison and probation. However, prosecutors said, there are more than 10 victims and Shaw stole $4.5 million.
If a federal judge sides with the government's evidence during sentencing, Shaw could get up to six years and five months in prison, federal prosecutor Gregory Staples said.
Authorities said Shaw and Gregory De Lavalette, 54, of Rancho Santa Fe, told victims that their money would be used as collateral in securities investments overseas. Lavalette stole about $395,000, prosecutors said.
Shaw told the victims, some of whom were his law office's clients, that he had completed high-yield investments in the past and had traded in AA-rated securities and bonds. He promised investors their money back within 30 days of requesting it.
The men promised between 30% to 40% weekly returns in some cases, officials said. The men spent all the money they collected on business and personal expenses, according to prosecutors.
The two men were indicted by a federal grand jury in 2007. They're scheduled to be sentenced in December.