Laguna man faces 15-year prison sentence

Mike Swanson

A Laguna Beach man faces a maximum sentence of 15 years in prison

after an grand jury on Aug. 5 indicted him on charges of lying to a

federal agency and obstructing its proceedings.

The U.S. Securities and Exchange Commission filed a civil lawsuit

against John R. Powell, 45, in July 1998, alleging that he’d violated

federal securities laws with a fraudulent oil-well investment he

offered through a company called Environmental Energy Inc. To avoid

paying a judgment of $571,842, the indictment says, Powell

understated the value of his $3 million house by nearly $2 million

and falsely claimed having a negative net worth.

Powell is scheduled to be arraigned Aug. 25 at the U.S. District

Court in Los Angeles. The charges are related to an ongoing

investigation by the FBI, said Thom Mrozek, public affairs officer

for the U.S. attorney’s office in Los Angeles. Mrozek wouldn’t say

whether he expected more charges as the investigation ensues.

“I can only comment on what we have filed,” Mrozek said.

The indictment charges Powell with two counts of making false

statements to a federal agency and one count of obstructing a federal

agency’s proceedings. The maximum fine is $750,000.

SEC staff offered in January 2002 to require that Powell repay

only $48,000 of his $571,842 in “ill-gotten gains,” according to the

indictment, if Powell provided a sworn financial statement proving he

couldn’t pay the full amount. Two months later, Powell submitted a

statement claiming his house had a “quick sale” value of $1.25

million, which was about the same amount he owed on his mortgage, and

falsely said he had no equity on the house.

It was later discovered that Powell’s house had been appraised at

more than $3 million, a mortgage lender was willing to loan him $1.75

million against the property, and he had built at least $500,000 in

equity.

The indictment also says Powell had used a bank account through a

film company he owned and controlled, Filmstar Productions, to pay

his mortgage and other expenses using funds he was trying to hide

from the agency.