Two Convicted in Investment Scam
LOS ANGELES (AP) _ Two men convicted of bilking elderly investors nationwide of $21 million have been sentenced to 10 years in prison and ordered to pay more than $7 million each in restitution.
Prosecutors say the men, who operated Cross Financial Services, solicited millions from more than 700 investors between 1993 and 1994 by promising the money would be used to make loans to government contractors, a conservative investment with good returns.
Instead, Douglas S. Cross, 49, and Owen R. Fox, 57, allegedly used some of the money from new investors to pay existing investors. They also put a portion of it into worthless letters of credit from a Ukrainian bank to inflate the balance sheet.
Prosecutors said the two men used more than $5 million to buy a jet and a yacht and to maintain their lavish lifestyle.
They were sentenced Monday by U.S. District Judge Consuelo B. Marshall. Cross, of Laguna Niguel, was ordered to pay $8.7 million in restitution, and Fox, of Hawthorne, was ordered to pay $7.8 million.
A third person allegedly involved in the scheme, Michael Colello, 48, of New Rochelle, N.Y., is scheduled to go on trial Jan. 9.
A fourth, Carroll Siemens, 68, of Peoria, Ariz., has pleaded guilty to fraud and money laundering. He is scheduled to be sentenced in February.