Calif. Investment Firm Investigated
IRVINE, Calif. (AP) _ A trustee has been appointed to find as much as $35 million missing from a defunct Orange County investment firm managed by two ex-convicts who allegedly lured clients, including two former Los Angeles Rams players, with promises of big returns.
Thomas H. Casey was appointed Tuesday by a federal judge at the request of investors, including former football players Eric Dickerson and Duval Love, who lost nearly $1 million with Irvine-based DFJ Italia.
``There is no evidence that the money was ever placed in suitable or appropriate investments,″ Steve Katzman, the group’s attorney, said in court papers.
Documents filed in U.S. Bankruptcy Court claim that DFJ lured investors, including sports and Hollywood stars, by boasting the firm had ties to Italian royalty and connections to the European economic community.
But documents show the two men who founded DFJ, Luigi DiFonzo and Angelo Ales, were convicted felons who met while cellmates in a federal prison. DiFonzo was convicted in 1989 of stealing $110,000 from a Minnesota widow and Ales served time for securities theft.
Federal investigators had been looking into DFJ for months amid accusations the firm ran a pyramid scheme that paid off old investors with money from new ones.
A group of five investors filed claims Monday to force the company into Chapter 7 bankruptcy. On Tuesday, U.S. Bankruptcy Judge John E. Ryan approved their request to appoint a trustee to take control of the company.
Ales was arrested Monday for an alleged parole violation. DiFonzo’s whereabouts were not immediately known.
Casey, a Costa Mesa bankruptcy attorney, said he would seize DFJ’s bank accounts, financial records and office property.
As many as 700 investors, lured with promises of 24 percent returns and a star-studded client list, were notified last week by the company their money might be gone.
``The reality of it hasn’t really set in,″ said Ken Meyers, who lost $35,000 in the alleged scheme.
Investors were originally told DFJ had billions of dollars in assets and a stake in an Italian royal family trust. But investigators say the royalty turned out to be DiFonzo, who claimed to be a descendent of a Sicilian royal family.
Love, a former Los Angeles Rams lineman, said in a sworn declaration he was introduced to a DFJ salesman in 1998 by another football player. Love agreed not only to invest $8,200, but also work as a part-time salesman.
Among his clients were a schoolteacher and a retired custodian who invested $164,000.
In court papers, Love said he became aware the operation was fraudulent in January when he tried to retrieve his clients money.