Pair Get Prison for Defrauding Investors
Two former owners of an Irvine-based investment firm were sentenced Monday to 10 years in federal prison for defrauding 700 victims of $21 million and spending much of the money on fat salaries and luxury perks.
Douglas S. Cross, 49, formerly of Laguna Niguel, and Owen R. Fox, 57, of Marina del Rey also were also ordered to make restitution payments to their victims.
Cross and Fox were convicted in May by a Los Angeles federal court jury of conspiracy, securities fraud and international money laundering.
Their firm, Cross Financial Services Inc., promised investors big profits, claiming it would use their money to make short-term loans to businesses that had won government loans, a practice known as “factoring.â€
Instead, prosecutors charged, the company’s executives siphoned much of the investor money for lavish personal expenditures. Fox used $710,000 to buy a Cessna airplane and a 44-foot yacht, according to FBI testimony. Larger sums of money were transferred to secret bank accounts in Switzerland.
Assistant U.S. Atty. Jeffrey Isaacs said Monday that many of the targets were retirees who were advised how to transfer proceeds from their 401k plans and IRAs.
Two other executives of Cross Financial Services pleaded guilty. One cooperated with the government and received a 33-month sentence. The other is awaiting sentencing. A fifth defendant is scheduled to go on trial next month.
Cross blamed his co-defendants for any wrongdoing, saying they used him as a front man because of his academic credentials. He has a master’s degree in business administration. He also told Chief U.S. District Judge Consuelo B. Marshall that he was inadequately represented by a court-appointed defense team.
And he accused federal agents of waging a vendetta against him, saying that if he dies in prison, they will probably “be dancing on my grave.â€
Marshall said she would have given Cross a lighter sentence but was bound by federal sentencing guidelines, which call for a term of 121 months to 151 months in prison.
Fox also contended that he was wrongly convicted. Near tears, he told the judge, “I’m not saying I didn’t do things, but at no time in my life have I ever intended--intended--to harm anyone.â€
Marshall ordered Fox to pay $7.8 million in restitution. Cross was assessed restitution totaling $8.7 million.
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