Businessman Charged With Securities Fraud

 

Orange County District Attorney
Press Release

 

Tony Rackauckas, District Attorney
401 Civic Center Drive West
Santa Ana, CA 92701

For Immediate Release
December 6th, 2001

Contact: DDA Mark Sevigny (714) 347-8704

 

SANTA ANA — The owner of a real estate investment company banker has been charged with stealing more than $3 million from investors through the sale of unsecured promissory notes between November 1995 and January 1998.

Edward Raleigh McLaughlin, Jr. (DOB 3-11-60) of Tustin, appeared for arraignment today in Superior Court on 21 felony counts of securities fraud, sale of unregistered securities, and grand theft in the operation of his business, McLaughlin & Associates of Newport Beach. The arraignment was continued until Dec. 21, 2001 at the request of McLaughlin’s attorney.  The felony complaint and arrest warrant were filed on Nov. 16, and McLaughlin was arrested two days later. He first appeared in court the next morning and has posted $100,000 bail.

McLaughlin & Associates was purported to be an international real estate investment and management corporation owned and operated by Edward McLaughlin Jr. The investors were promised an annual return of 10 percent on the notes and a return of their principal after five years. The complaint alleges that McLaughlin defrauded eight investors out of $3,083,750, funds that were mostly the victims’ retirement accounts.

Numerous misrepresentations were made in documents to induce the alleged victims to invest.

McLaughlin made several interest payments until the last part of 1997 when he told investors that he had been defrauded of working capital for the company and thereafter was unable to meet his obligations. A review of the company’s bank records revealed that more than 85 percent of the funds deposited into company accounts came from investors and not from any business projects or revenues. The great majority of the expenditures of the company were for company overhead and McLaughlin’s personal expenses. There was no evidence of any substantial business expenditures to, or revenues from legitimate business projects supposedly being undertaken by McLaughlin, as represented in the company documents given to investors.

The company closed its doors in 1998. The victims didn’t realize that they had been defrauded until after the company collapsed.

To date, none of the investors have been repaid.

If convicted, McLaughlin could face up to 20 years in state prison and millions of dollars in fines.

The investigation was conducted jointly by investigators of the Newport Beach Police Department and the Orange County District Attorney’s Economic Crimes Unit.