Orange County Man Who Ran $55 Million Investment Fraud Scheme Involving Golf Clubs and Internet Company Sentenced to 27 Years in Federal Prison

SANTA ANA, CA—An Orange County man who admitted running a multifaceted fraud scheme that bilked hundreds of victims out of approximately $55 million was sentenced today to 27 years in federal prison.

Colin Nathanson, 62, who lived in Coto De Caza until his arrest in 2005, was sentenced to 324 months in prison by United States District Judge Cormac J. Carney. Prior to his arrest, Nathanson was the president and chief executive officer of Giant Golf Company and Play Big Enterprises, Inc., both of which sold golf clubs and golf accessories out of Irvine and Rancho Santa Margarita.

In court papers and when he pleaded guilty last year, Nathanson admitted that he fraudulently induced several hundred people to invest money with the Nathanson Investment Trust (NIT) based on bogus claims that they were buying an ownership interest in a privately-held, Internet-based technology company. Nathanson originally represented that the private Internet company was about to conduct an initial public offering, but he later changed the pitch by claiming that the company had elected to pursue merger negotiations with a large public company. Nathanson admitted that the private Internet company was completely fictitious. Contrary to the promises made by Nathanson, the investors' money was not used to acquire shares in any company on behalf of the investors. Instead, Nathanson used the money to finance the unprofitable business operations of his golf companies and to pay for extravagant personal expenses, including gambling expenses and payments for three houses located in Coto De Caza and Trabuco Canyon. The NIT scheme cost investors $28.4 million.

In addition to the scheme related to the Internet company, Nathanson also admitted that he organized the sale of other unregistered securities. Nathanson admitted, for example, that he provided materials to investors that falsely represented that Giant Golf and Play Big were successful and on the verge of going public. In fact, they never made any profits from operations. In other materials, investors were fraudulently induced to invest in various other projects, including an Internet-based casino, based on false claims that the investments paid anywhere from 2 percent to 5 percent per month.

The Nathanson Investment Trust scheme went on for several years and, prosecutors argued in court papers, it was just one of many schemes that Nathanson orchestrated from the mid-1990s through 2004, when his activities were shut him down by the U.S. Securities & Exchange Commission. In total, prosecutors argued, Nathanson cost victims approximately $55 million.

Nathanson’s fraudulent investment schemes were the subject of a civil enforcement action filed by the SEC. In connection with the civil case, the SEC succeeded in having a number of Nathanson's businesses placed in receivership, but by then the vast majority of the investors’ funds had disappeared. Additionally, Nathanson was the subject of cease and desist orders issued by state securities regulators in California in 1994, Ohio in 2002, and North Dakota in 2004. The case was investigated by the Federal Bureau of Investigation.