LOS ANGELES (CN) — A witness at a preliminary hearing Wednesday testified that she and her late mother lost $315,000 in an alleged $21.5 million Ponzi scam in which a movie director and insurance agent face criminal fraud charges.
The witness’s elderly mother invested in a little-known movie called “Not Forgotten,” believing the extra money would come in handy as she struggled to stay in her Alhambra home.
She took the salesman by the hand, looked him in the eye and told him that if the investment went south she could lose her savings.
He told her investment was safe and the risk was nonexistent, her daughter Maddalena Stodart testified at the hearing for the movie director.
Los Angeles County prosecutors accuse Dror Soref and insurance agent Michelle Seward of persuading elderly investors to part with their life’s savings to invest in the Simon Baker thriller and a musical called “Twist.”
Soref and Seward were charged a year ago in a 72-count complaint that includes 56 counts of securities fraud, 15 counts of sale of unregistered securities and one count of device, scheme or artifice to defraud a securities transaction.
They have pleaded not guilty. If convicted, they each face up to 75 years in state prison.
Los Angeles County prosecutors say the defendants promised investors high returns but the payments never arrived or the defendants used new investors’ money to fend off earlier investors, from 2007 until 2010.
Stodart, 51, a teacher at Mitchell Community Elementary School, wiped away tears as she said her mother had invested more than $215,000.
Stodart’s mother, Ann Licata, was 87 years old when she died this year. Stodart told Deputy District Attorney Renee Cartaya that she took care of her mother but that the losses had hit her hard.
“Mentally, my mom was very distraught,” Stodart said. “She felt she let my dad down.”
Stodart’s late father Tom had emigrated from Sicily to America and worked hard to provide a home and savings for his family, Stodart said. The widow was left with $750,000 in assets and hoped that investing in Soref’s movie would help pay for repairs in her home. But after payments in October and September of 2011, the checks stopped coming, Stodart said.
She introduced Seward’s brother Jeremy to her mother after they invested in the movie, accepting his claim that there was no risk because they were protected by an insurance policy, Stodart said.
“He said there was no risk. He said that it was completely safe,” Stodart said. “He said that over and over again.”
Cartaya placed a glossy coffee table book front of Stodart on the witness stand. The witness confirmed that Jeremy had shown them same book. Believing that the investment was safe, Stodart and her husband Craig decided to invest $100,000.
Stodart said she suspected she had been scammed after months of getting the runaround. Finally, in the summer of 2012, her worst fears were confirmed when she received a notice that Soref had filed for bankruptcy. By then the payments had long since dried up, Stodart said.
Dressed in a baggy blue dress shirt, the curly haired Soref sat at the defense table. His attorney Bryan Altman asked Stodart if she had had any dealings with Soref at any time.
“No,” Stodart replied.
Altman pointed to a disclaimer in the coffee table book that warned the investment could be risky.
Stodart said she had read the disclaimer and asked Seward’s brother about it. He said the language did not apply to investments from retirement funds, she testified.
Soref and Seward were charged a year ago in a 72-count complaint that includes 56 counts of securities fraud, 15 counts of sale of unregistered securities and one count of device, scheme or artifice to defraud a securities transaction, the District Attorney’s Office said.
They have pleaded not guilty.
Prosecutors say almost 140 investors lost a total of $21.5 million in the scheme.
In a civil lawsuit filed in 2012, the California Department of Corporations said Seward offered free seminars and one-on-one consultations. She lured investors by telling them she “was tired of seeing seniors being taken advantage of by the financial industry,” and said she would sell her million-dollar home before investors would lose a penny, according to the civil complaint.
An invitation for a January 2008 seminar at the Hyatt Valencia hotel, hosted by Seward and cited in the complaint, stated: “Please be our guest and join us for the most enjoyable and informative Senior Financial Seminar you will ever attend!”
The District Attorney’s Office said investors were promised “double-digit returns,” and some investors lost as much as $395,000.
If convicted, Soref and Seward each face up to 75 years in state prison.