Ex-Lawyer Charged With Securities Fraud

SAN JOSE, Calif. (CN) - A disbarred securities lawyer made his first court appearance on charges of defrauding clients by convincing them to make contributions to sham investments, the Justice Department said.

According to an indictment unsealed on Sept. 11, James Seltzer, 67, approached clients and friends between 2005 and 2011 to solicit funds for sham investments. For some, Seltzer offered investments in real estate outside the United States while others were asked to invest in stock opportunities, the Justice Department said.

In some cases, Seltzer told victims he could purchase shares of private companies before they were acquired by publicly traded companies and that his shareholder status gave him special access to the shares before the acquisition, the indictment says.

But instead of using his clients' money to make the investments, Seltzer used it to pay his mortgage, credit card bills and for international travel. He also used some of the funds to engage in a Ponzi scheme - diverting new investors' money to pay back earlier investors, the Justice Department said.

Seltzer faces charges of securities fraud, mail fraud and money laundering. If convicted, he could be sentenced to up to 150 years in prison.

In June 2014, the California Supreme Court disbarred Seltzer after the State Bar's finding he had misappropriated clients' funds and settlement money and allowed several client trust accounts to fall below acceptable thresholds - with one of the bank accounts overdrawn to the tune of over $11,000.

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