Local : 10 Arrested in Biggest-Ever Bust of Boiler-Room Investment Scams

Securities agencies from seven states have raided a dozen California boiler-room investment operations over the past 10 days, authorities said today, seizing evidence and arresting 10 suspects so far in the biggest multi-state telemarketing crackdown in history.

The bulk of the boiler rooms were based in Los Angeles and Orange counties, although others were located as far north as Sacramento County and as far south as San Diego. The firms are suspected of fleecing an estimated 10,000 victims in 50 states out of more than $50 million by soliciting investments in bogus precious metals and oil and gas schemes, said G. W. McDonald, chief of enforcement for the California Department of Corporations.

Those arrested face felony charges of grand theft, securities fraud, commodities fraud, unlicensed activity and violations of the California telemarketing registration law, McDonald said at a press conference this morning in Los Angeles. The victims lost “nest eggs” ranging from as little as $1,000 to as much as $600,000 each, he said.

The raids were coordinated under a recently expanded federal program called the Leviticus Project, named after the third book of the Bible, which states in part: “Thou shalt not defraud thy neighbor.” The project gives grants and interstate cooperation to boiler-room bashers in 20 states. California joined the project last September.