La Habra Man Who Became a Fugitive Convicted of Defrauding Elderly Couple in $5.5 Million Gold Mining Scheme; Also Faces Weapons Charges
|FBI Los Angeles December 09, 2011|
SANTA ANA—A La Habra man who was convicted by a federal jury last Friday for defrauding an elderly couple in a $5.5 million gold investment scheme, and for absconding to avoid prosecution for the fraud, also faces new charges, announced United States Attorney André Birotte Jr. and Steven Martinez, Assistant Director in Charge of the FBI in Los Angeles.
At the conclusion of a trial that lasted four weeks in United States District Court in Santa Ana, California, a jury found John Arthur Walthall, 56, guilty of four counts of wire fraud and one count of failure to appear. On November 2, 2011, a federal grand jury in Santa Ana charged Walthall with firearms violations in connection with his unlawful possession of a gun while he was a fugitive.
During the recent trial, prosecutors presented evidence to establish that Walthall persuaded an elderly couple to invest $5.5 million in a partnership known as Advanced Recycling General Partnership (ARGP) during 2007. Walthall purportedly created the partnership to fund the extraction of gold from abandoned mines. In order to boost his credibility, Walthall told the couple he had conducted research on the gold mining process for 20 years and that they would earn a profit on their investment. Walthall also told the couple they would be in the position to authorize all expenses.
Prosecutors presented evidence to demonstrate how Walthall went about spending investor money for various personal items. In an effort to conceal the way in which he spent their investment, prosecutors argued, Walthall transferred the partnership funds to 27 separate bank accounts through which he spent the money, without the couple’s knowledge or approval, on a large number of personal items. For instance, Walthall used ARGP money to pay off his personal vehicles, pay off his credit cards, and pay part of a $250,000 personal loan he received in 2005 from a former fiancée.
Walthall set up a fake bank account which purported to process payments for a ”temporary secretarial services” company. Walthall then prepared checks in the amount of approximately $3200 per month from ARGP funds, noting “temporary secretarial services” in the memo section. The evidence showed that Walthall then deposited these checks into the fake bank account, only to immediately transfer the money to make court ordered alimony and child support payments.
Walthall used investment money to buy $2.5 million dollars of gold coins, gold bars, and gold dust without the approval of the investor couple. Additional personal expenses included a hyperbaric oxygen chamber estimated to be worth $60,000 and thousands of dollars worth of exercise equipment, health supplements, and other personal health items. The evidence showed that Walthall used investor funds to pay for his child’s rent payments and $10,000 tuition for a film school, as well as thousands of dollars on personal expenses for his family and friends.
Earlier this year, Walthall requested a postponement of his trial date based on a medical condition. Walthall, who was out on bail at the time, was observed carrying out normal activities in the following weeks, including walking and dining out with friends. In June, the court revoked Walthall’s bail and ordered him to appear in court for a hearing on June 27, 2011.
Walthall failed to appear for the June 27 hearing and fled the state of California. Walthall remained a fugitive for a short time and was arrested on July 26, 2011, in Mesquite, Nevada. A gun and a book entitled, “How to Be Invisible,” were found in Walthall’s possession when he was arrested. Walthall was subsequently indicted on charges of receiving the gun while under indictment, and possessing a gun while a fugitive. He is scheduled for trial on the weapons charges on January 3, 2011.
Evidence introduced during the trial revealed that, at the time of his arrest, Walthall was using the name Art Langford. Using the false name, Walthall obtained approximately $10,000 from an Orange County businessman and used part of that money to facilitate his escape. Investigators believe that Walthall may have defrauded others using the name Art Langford during this time.
Walthall faces a maximum statutory sentence of 130 years in prison when he is sentenced on March 5, 2012.
This investigation was conducted by the Federal Bureau of Investigation. The case leading to Walthall’s conviction was prosecuted by the United States Attorney’s Office, which is also handling the weapons charges.
FBI: 310 996-3343
U.S. Attorney’s Office: 213 894-6947