The United States Attorney's Office

ORANGE COUNTY MAN INDICTED IN INVESTMENT SCHEME THAT BILKED OVER 150 INVESTORS OUT OF MORE THAN $20 MILLION

An Orange County resident was named today in a 16-count indictment that charges him with participating in a fraudulent investment scheme with an Orange County attorney that allegedly took in more than $20 million from approximately 150 investors.

James Halstead, 61, of Tustin, was indicted this afternoon by a federal grand jury in Santa Ana. The indictment accuses Halstead of five counts of wire fraud, eight counts of money laundering and three counts of mail fraud.

Halstead allegedly worked with an Irvine attorney, Jeanne Rowzee, 49, to bilk victims who thought they were investing in public investments in private entities (PIPE) and money market programs. Rowzee and Halstead allegedly promised returns of 25 percent to 35 percent every three or four months.

According to court documents, Rowzee and Halstead solicited investments in PIPEs as short-term bridge loans to companies that were in the process of obtaining equity financing for growth. Victims were told that their money would be used to fund the short-term loans, and Halstead and Rowzee claimed they had never lost money in this type of investment. Halstead and Rowzee told victims that Rowzee was an experienced securities attorney and had previously worked for the Securities and Exchange Commission. 

In reality, the victims’ money was never invested, and the money was used to make payments to some investors and to support the lavish lifestyles maintained by Rowzee and Halstead. According to the indictment, Halstead used $191,005 of victim-investors’ money to buy a Ferrari from a dealership in Las Vegas, more than $1 million to purchase a home for himself in the Las Vegas area, and $162,350 to buy a Porsche in Arizona.

Halstead was also separately charged with defrauding a man in Newport Beach by offering phony investments in insurance premium funding.  According to the indictment, Halstead took money from the man with the promise that the money would be used to fund insurance premiums for third parties.  In return, Halstead would pay the victim one point (one percent of the amount invested) within 30 to 40 days, and 10% interest per year, calculated for the time the money was invested.  Instead, the indictment charges that Halstead used the money for his own enrichment.  The indictment also charges that Halstead used money from the insurance premium scheme to make bogus investment return payments to victims in the PIPEs scheme, and would use money from victims in the PIPEs scheme to make bogus investment return payments to the victim in the insurance premium scheme.

The investigation into the alleged fraudulent activity of Rowzee and Haltead began just over a year ago when victims of the scheme reported the fraud to the FBI’s Orange County office.  

Halstead will be summoned to appear in United States District Court for an arraignment on September 22 . If he is convicted of the 16 counts in the indictment, he faces a statutory maximum sentence of 280 years in federal prison.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent unless proven guilty in court.

The investigation into Rowzee and Halstead was conducted by the Federal Bureau of Investigation, which received the assistance of the Securities and Exchange Commission.

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Release No. 08-126
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