A Topanga, Calif., man, who defrauded 60 people, many of them California transit workers, out of $7 million in their retirement money, was sentenced Aug. 15 to nine years in federal prison and ordered to make restitution.

Thomas L. Mitchell, 64, spent 15 years building a Ponzi scheme that targeted retired train and bus operators in the Los Angeles County Metropolitan Transportation Authority. The scheme lasted until June 2010, after which he pleaded guilty to mail fraud.

He was sentenced by U.S. District Judge Gary A. Feess for setting up several companies in the Los Angeles and Santa Ana area through which he collected $15 million from 150 people.

About half the money was used to pay early investors but the rest was used to furnish Mitchell with a lavish lifestyle, including paying for a luxury apartment, three expensive cars, vacations, high-end restaurants meals and tickets to sporting events and shows, according to the U.S. Attorney Andre Birotte Jr. for the Central District of California. Only a miniscule amount of the money was actually placed in investments.  

Mitchell was the principal of Mitchell Porter & Williams Inc. (MPW), a California corporation that is now suspended from doing business. He acted as an unregistered broker with MPW to perpetrate the frauds, according to the SEC. MPW, aided and abetted by Mitchell, improperly registered with the SEC as an investment advisor even though it had less than $25 million under management and failed to make and keep required books and records, the SEC said.

Judge Feess called Mitchell's behavior "egregious" and said the scheme featured a "level of deception (that) was remarkable" and was driven by "no motive except for greed."

Mitchell had no connection to the transit union other than that is where he got his foot in the door and built contacts, says the U.S. Attorney's Office. He portrayed himself as a successful investment advisor and falsely promised high investment returns through stocks, bonds and real estate. He promised at least one victim her principal was insured by the U.S. government. Through these false claims, Mitchell convinced victims to transfer their retirement funds to him.

"Mr. Mitchell committed an audacious fraud that spanned many years and devastated any victims," Birotte says. "He was able to lead a luxurious lifestyle by stealing the life savings of hard-working men and women who only sought a dignified retirement. For his criminal conduct, Mitchell richly deserves his nearly decade-long prison sentence."

 

-Karen DeMasters