5 December – LAWFUEL – The Law News Network – An Orange County man has been arrested on federal mail fraud charges related to the sale of $28.4 million in securities in a non-existent internet company.
Colin Nathanson, 56, a former resident of Coto De Caza who now lives in Ladera Ranch, was arrested at his home last night by special agents with the Federal Bureau of Investigation. Nathanson was taken into custody without incident, and he is scheduled to make his initial court appearance this afternoon in United States District Court in Santa Ana.
Nathanson is the former president and chief executive officer of Giant Golf, Inc. and PLAY BIG Enterprises, Inc., both of which sold golf clubs and golf accessories out of Irvine and Rancho Santa Margarita. A six-count indictment unsealed today alleges that Nathanson used telemarketing “boiler rooms” to fraudulently induce several hundred people to invest money with the “Nathanson Investment Trust.” Victims were told that they would acquire an ownership interest in a “privately held,” “internet based technological company.”
According to the indictment, Nathanson initially represented that the private internet company was about to conduct an initial public offering, but later changed the pitch to tell victims that the company had instead elected to pursue merger negotiations with a large public company. Nathanson said he could not disclose the identity of the private Internet company to investors due to the existence of a “confidentiality agreement.”
The indictment further alleges that the private internet company referenced in Nathanson’s investor letters was a fictitious business entity. The investors’ money was not used to acquire shares in any company on behalf of each individual investor.
Nathanson is accused of diverting, misusing, and misappropriating the investors’ funds. Nathanson allegedly used the money to finance the unprofitable business operations of Nathanson’s golf companies, Giant Golf Company and Play Big Enterprises, Inc. Nathanson also used the money to pay for extravagant personal expenses, including gambling expenses and payments for three houses located in Coto De Caza and Trabuco Canyon.
The indictment relates to an investment scheme that was the subject of a civil enforcement action that the United States Securities and Exchange Commission filed against Nathanson and his businesses last year. In connection with the civil case, the SEC succeeded in having a number of Nathanson’s businesses placed in receivership. Nathanson later stipulated to entry of a judgment against him in that case. See: .
If he is convicted, Nathanson faces a maximum statutory sentence of 20 years in federal prison for each of the six counts of mail fraud alleged in the indictment.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
The case was investigated by the Federal Bureau of Investigation.
CONTACT: Assistant United States Attorney Robert J. Keenan