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The following article was posted on May 8th, 2013, in the New Times - Volume 27, Issue 41 [ Submit a Story ]
The following articles were printed from New Times [newtimesslo.com] - Volume 27, Issue 41

Moriarty awaits extradition following his Washington arrest

BY MATT FOUNTAIN

When New Times last spoke with Al Moriarty (“The troubled times of Al Moriarty,” Feb. 28), the former Grover Beach financial advisor said he was going over his books and planning his return to San Luis Obispo County, where he would sort out his financial obligations and leave the whole mess behind him.

At the time, Moriarty was facing some 19 civil lawsuits after allegedly defrauding clients out of up to $22 million, and he’d recently filed for Chapter 7 bankruptcy in Washington State—even though the bulk of his creditors and alleged victims are in San Luis Obispo and Kern counties.

“I’m not running,” Moriarty said in a phone interview in February. “I had to get the hell away to think.”

But on May 3, following a lengthy investigation by the SLO County District Attorney’s Office and the California Department of Corporations, the SLO County DA’s Office filed charges against Moriarty. Superior Court Judge Barry LaBarbera promptly issued a $5 million warrant for his arrest. Three days later, Moriarty was being held in a Kitsap County Jail awaiting extradition to SLO County.

Moriarty, 79, is charged with seven felonies, including grand theft by embezzlement, selling securities using fraudulent practices and false statements, and selling securities and investments without a license. Accompanying the charges are a host of criminal enhancements: misleading investors on the financial condition of his business, falsely stating the nature of his investments, and failing to disclose when he was preparing to file bankruptcy.

On May 7, he signed an extradition waiver and was awaiting SLO County DA investigators to bring him to California, where he’ll be booked into the County Jail as he awaits arraignment.

Moriarty spent decades as a well-known figure in SLO County, having played football for Cal Poly until his graduation in 1957, when he got into the insurance business. Despite the fact that allegations first began surfacing in June 2012, the Moriarty Enterprises ad banner still sits prominently atop the scoreboard at Cal Poly’s Spanos Stadium—a thank you from the university following a sizable donation from Moriarty.

His alleged victims, their family members, their attorneys, and the court documents they filed as recently as November all allege a similar M.O.

According to a sworn declaration by SLO County District Attorney Investigator A.J. Santana, who began investigating complaints filed against Moriarty to the DA’s Economic Crime Unit in November 2012, Moriarty never applied for or received a permit to sell securities from the California Department of Corporations, though he does have a current license to sell insurance. Santana alleges that Moriarty used his “connections” in the insurance industry and with Cal Poly to “identify and contact his victims.”

Investigators allege that Moriarty operated a “Ponzi-like scheme,” where he would issue hand-written promissory notes, starting lenders out with a three-month investment and promising 10 to 12 percent interest. He would pay on time. He would then convince them to add additional income and roll it over for a longer term. Investors initially believed they were making big profits and recruited friends and family, according to court documents.

Moriarty had been selling annuities to some victims for as long as 20 years.

He first told investigators that all investments taken in by his business were secured with physical gold he bought, his various real estate holdings, and a $6 million life insurance policy payable to his clients in the event of his death. He allegedly told investors that their money would be used to buy more gold and real estate or would be loaned out to local businesses—and teachers for down payments on homes, in particular—at high rates of interest.

“Our client was led to believe that she was lending money to school teachers,” Bay Area attorney Anne Marie Murphy told New Times.

Murphy represents one alleged victim who was herself a retired teacher until she lost her nest egg to Moriarty. That client has been forced to return to work in order to make bills, Murphy said.

In his documents filed in U.S. Bankruptcy Court in the Western District of Washington, Moriarty lists his debt at nearly $18 million. Prior to his arrest, Moriarty was scheduled for a bankruptcy hearing in July. As of April 15, at least eight of Moriarty’s former clients have filed federal complaints against his filing.

Kirby Gordon, Moriarty’s Pismo Beach-based attorney, didn’t return a request for comment, nor did Marc Stern, Moriarty’s Washington-based bankruptcy attorney, as of press time.