Criminal Justice News

Tuesday, May 01, 2012

Orange County Man Who Took $5.5 Million from Elderly Couple in Gold Investment Scheme Sentenced to 14 Years in Federal Prison

SANTA ANA, CA—A La Habra man who was convicted of defrauding an elderly couple in a $5.5 million gold investment scheme was sentenced this evening to 168 months in federal prison.

John Arthur Walthall, 56, was sentenced late today by United States District Judge Andrew J. Guilford. In addition to the prison term, Judge Guilford ordered Walthall to pay $2,479,000 in restitution to the victims, who are both in their 80s.

A federal jury in Santa Ana convicted Walthall on December 2, 2011 of four counts of wire fraud and one count of failure to appear in court. During a four-week trial, prosecutors established that Walthall persuaded an Orange County couple in 2007 to invest $5.5 million in a partnership he called Advanced Recycling General Partnership, which he claimed would fund the extraction of gold from abandoned mines. In order to boost his credibility, Walthall told the couple—who were 83 and 80 at the time of the fraud—that he had conducted research on the gold mining process for two decades, they would earn a profit on their investment, and they would authorize all expenses.

However, the evidence at trial showed that Walthall spent the victims’ money to pay for various personal items. “Without the victims’ knowledge, defendant spread the victims’ money across more than 30 bank accounts in the names of both the partnership and various fictitious business names at different financial institutions, and used the money to pay alimony to his ex-wife, pay film school tuition for his son, pay off a personal debt, pay off multiple vehicles, and purchase a hyperbaric oxygen chamber, among other personal expenditures,” prosecutors wrote in a sentencing memo.

Walthall was indicted in October 2009 and was arrested the following month. He was released on bond in early 2010 and, after series of continuances, he was scheduled to go on trial in February 2011. Four days before trial was scheduled to begin, Walthall checked himself into a hospital. In court filings and in conversations with a pre-trial services officer, Walthall claimed to be in very ill health. However, surveillance by the FBI revealed that Walthall was engaged in normal activities. Walthall subsequently failed to appear for a court hearing in June 2011, and he was briefly a fugitive until the FBI arrested him in Nevada in July. When he was taken into custody, FBI agents recovered a gun and a book titled, “How to Be Invisible.”

“Fraud schemes that victimize older residents are nothing short of elder abuse,” said United States Attorney André Birotte Jr. “While elder abuse is often committed by family members or caregivers, this case reminds us that the elderly can also be targeted by outside scam artists, whose actions can bring significant financial and emotional harm.”

Steven Martinez, Assistant Director in Charge of the FBI’s Los Angeles Field Office, stated: “The defendant in this case defrauded an elderly couple of millions and then tried to avoid prosecution by becoming a fugitive. This sentence finally delivers justice to the victims and, hopefully, serves as a cautionary tale to prospective investors.”

The investigation in this case was conducted by the Federal Bureau of Investigation.

Assistant United States Attorney Mark Takla
(714) 338-3591

Assistant United States Attorney Ivy Wang
(714) 338-3549

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