LOS ANGELES (CBS) — A San Fernando Valley man accused of conning Los Angeles County transit pensioners out of an estimated $7 million in a Ponzi scheme pleaded guilty on Friday.
Prosecutors say Thomas L. Mitchell, 64, is charged with mail fraud and faces up to 20 years in federal prison.
Mitchell operated or used several companies to perpetrate the scheme, which targeted retirees, many of whom had been employed as transit operators by the Metropolitan Transportation Authority, according to
the U.S. Attorney’s Office.
Prosecutors said Mitchell portrayed himself as a successful investment adviser, falsely promising high investment returns through stocks, bonds or real estate.
Mitchell also reportedly insisted his investments were safe, falsely telling at least one victim that her money was insured by the federal government.
With these and other bogus claims, Mitchell convinced victims to transfer their retirement funds from their employers’ retirement plans into accounts that he controlled, according to federal officials.
Mitchell’s Ponzi scheme, which operated from 1995 to 2010, “placed only a minuscule fraction of the retiree victims’ money in legitimate investments,” according to the plea agreement.
“Moreover, instead of taking steps to protect the retiree victims’ principal investments, (Mitchell) misappropriated virtually all of their money to, among other things, live a lavish lifestyle,” which included a luxury apartment, three luxury automobiles, expensive vacations, high-end restaurants and tickets to sporting events and shows, according to the U.S. Attorney’s Office.
As part of his plea agreement, Mitchell agreed to pay restitution of about $7 million, and is expected to make his initial federal court appearance April 21.
Last year, the U.S. Securities and Exchange Commission sued Mitchell and his companies, obtaining an injunction and an order freezing his assets, prosecutors said.
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