Department of Justice agents served arrest warrants against the following six defendants, who were charged with grand theft and securities fraud in Orange County Superior Court:
Lambert Vander Tuig, 50, Santa Margarita, California, currently held in the Orange County Sheriff’s Department.
Jonathan Carman, 45, Laguna Hills, California, currently held in the Orange County Sheriff’s Department.
Mark Sostak, 50, Ladera Ranch, California, currently held in the Orange County Sheriff’s Department. Bail is set at $4.5 million.
Scott Yard, 47, Costa Mesa, California, remains at large.
Soren Svendsen, 43, Coto De Caza, California, is currently being held in the Orange County Sheriff’s Department. Bail is set at $2.2 million.
Robert Waldman, 48, is scheduled to turn himself in to authorities.
There are 89 total criminal charges against the defendants who “callously conned” more than a thousand people, including retired senior citizens, out of $52 million through sham real estate projects, using the investors’ money to buy planes, expensive cars and lavish vacations.
From 2001 to February 2006, Irvine-based Carolina Development Company peddled $52 million worth of stock to more than a thousand investors. The company claimed the proceeds would be used to buy and develop luxury resorts and upscale communities adjacent to golf courses designed by Arnold Palmer, Jack Nicklaus, and Greg Norman. Investors bought anywhere from $15,000 to $1 million in stock, including senior citizens who invested their retirement funds. The company bought some land, but did nothing to develop it, despite its claim that 85% of the $52 million invested would be used for land acquisition and development.
To persuade investors to buy shares of Carolina Development Company, the defendants claimed that Arnold Palmer had partnered with them. The defendants promised that investors would reap huge dividends and assured those who invested a minimum of $100,000 that their investment would be secured by deeds to specific parcels of land. None of these claims were true.
The defendants diverted more than $24 million for extravagant bonuses, personal medical bills, airplanes, fancy meals, BMWs, concert tickets and luxury vacations. To keep investors at bay, the defendants engaged in a Ponzi scheme, paying some investors “returns” on their investment using money from the new investors.
“These six men callously conned hundreds of people into investing $52 million into a company that they treated as their personal bank account,” California Attorney General Edmund G. Brown said. “They fraudulently took investors’ money and spent it on an array of luxury items, relying on a Ponzi scheme to keep investors at bay.”
These criminal charges were preceded by civil actions brought by the U.S. Securities and Exchange Commission (SEC). The SEC in 2007 won a $29.2 million judgment against Lambert Vander Tuig, the president of the company, and a $2.1 million judgment against Jonathan Carman, vice president of the company.
If convicted, defendants Vander Tuig and Carman could receive sentences in excess of 10 years in state prison. The remaining defendants would be subject to lesser prison sentences.