May 21 2012 – LawFuel US Law Newswire Service –
SANTA ANA, California – The owner and operator of a Santa Ana investment firm was sentenced today to 144 months in federal prison for operating a Ponzi scheme that collected more than $10 million from approximately 36 victims, many of whom were elderly residents of Orange County and Los Angeles County.
Richard H. Nickles, 59, of Irvine, who was the owner of Innovative Advisory Services, Inc., was sentenced by United States District Judge Cormac J. Carney. In addition to the prison term, Judge Carney ordered Nickles to pay $6.8 million in restitution.
“Investment fraud schemes that target senior citizens are particularly sinister,” said United States Attorney Andre Birotte Jr. “Mr. Nickles went to great lengths to disguise the criminal nature of his scheme, and his actions caused harm to many investors, including the elderly victims who trusted his false promises. This lengthy sentence in federal prison should serve as a warning to others who want to follow in Mr. Nickles’ footsteps: the end of the line for con men is a prison cell.”
Nickles pleaded guilty in June 2011 to mail fraud and securities fraud, admitting that his scheme raised more than $10 million and three dozen victims suffered losses of approximately $6.8 million because some of the money was returned to investors during the course of the scheme.
As part of the investment scheme, Nickles placed advertisements in the Orange County Register and the Los Angeles Times that promoted safe investments through Innovative Advisory Services. The advertisements variously described the investments as “U.S. Government Guaranteed,” “FDIC Insured,” “Guaranteed” or “Insured,” and stated that there was a “$50,000 Minimum Investment.” After being contacted by potential investors, Nickles met with them and offered investments in various types of low-risk bonds. According to court documents, Nickles took money from investors, but, instead of investing the money in the bonds he recommended, he used the money to pay off prior investors or trade in securities not authorized by the investors. As part of his scheme, Nickles created fraudulent statements from Innovative Advisory Services that were mailed to investors. Investigators also determined that of the funds investors deposited, Nickles transferred hundreds of thousands of dollars to his personal bank accounts and those of his family members. Furthermore, investigators found that Nickles had transferred approximately $170,000 to bank accounts in the Turks & Caicos.
In sentencing documents filed with the court, prosecutors emphasized “the sophistication and audacity of defendant’s fraud, the extensive suffering inflicted on his victims, and his flagrant defiance of court orders” in a related civil case brought by the Securities and Exchange Commission. In particular, prosecutors noted that Nickles withdrew victims’ funds from a bank account that a federal judge had ordered frozen at the SEC’s request.
Nickles has been in custody since he was arrested by special agents with the FBI on July 9, 2010 during a meeting with two victims at his Santa Ana office.
The criminal case against Nickles is the result of an investigation by the Federal Bureau of Investigation.
CONTACT: Assistant United States Attorney Joshua Robbins
Release No. 12-066