Attorney General Becerra: Three Individuals Sentenced to Prison for $11 Million Investment Scam Targeting Seniors
SACRAMENTO – California Attorney General Xavier Becerra today announced that three individuals have been sentenced to state prison terms ranging from three to 30 years for an over $11 million investment scheme that targeted elderly investors. In a nine-year scheme that began in 2003, four defendants — James A. Litzinger, Gregory T. Chapman, Rogel Patawaran and Wallace E. Thomas — operated a scam company, Authotecq, and sold over $11 million worth of unregistered securities. Another suspect involved in the scheme, Michael R. Diaz, remains at large. Three of the four defendants were sentenced, the fourth is deceased.
“James A. Litzinger, Gregory T. Chapman, Rogel Patawaran and Wallace E. Thomas meant to target elderly Americans and their pocketbooks. They deceived and engaged in unscrupulous practices with other people’s money,” said Attorney General Becerra. “James Litzinger, Gregory Chapman, Rogel Patawaran and Wallace Thomas chose to be crooks. Today they are felons. That should be the fate of those who fraudulently seek personal gain at the expense of hardworking Californians.”
The company claimed to be developing an internet banking system with proprietary encryption technology. However, the defendants did little to develop a product and instead lined their own pockets with millions of dollars in investors’ money. Investors never received any returns on their investments. Litzinger was sentenced yesterday and received an eight-year prison sentence. Previously, defendants Chapman and Patawaran were convicted of 139 counts of grand theft and securities fraud following a jury trial in 2018. The court sentenced Chapman to 30 years; Patawaran passed away while in custody awaiting sentencing. Thomas, who pled guilty prior to trial, was sentenced in early December to three years in state prison. The sentencing hearings finally concluded after a host of post-trial motions and hearings.
The sentencing comes following a multi-year investigation into the scheme that targeted investors, many of whom were seniors. Investors were not informed of material facts, including that:
- Salespeople were taking up to a 45 percent commission on money brought in;
- The company had received a Desist and Refrain Order from the California Department of Business Oversight to stop selling stock; and
- The defendants were mostly lining their own pockets with the balance of investor funds, spending those funds on fine dining, multiple cars, rent, and cigars.
The case was investigated and prosecuted by the California Department of Justice with assistance from the California Department of Business Oversight.