From "Acknowledged Leader" to Convicted Felon for Reed Diehl
UPDATED WITH THE TWO CENTS OF THE FBI...
With the guilty plea in a multi-million dollar Ponzi scheme entered by Reed Diehl, the standout Mater Dei High School center who went on to an impressive college football career at the University of California and a brief stint with the Tennessee Titans, it's interesting to look back at some of what was written years ago about the Coto de Caza man now facing up to 70 years in prison. (See refinement of this by the FBI below.)
The 30-year-old was indicted last year by a federal grand jury on charges that he bilked $2.5 million from a developer, saying he was using the money as a down payment on a condominium building project in Mexico. Instead, prosecutors proved, Diehl used the money to pay other investors he owed. While pleading guilty in the federal court in Santa Ana Monday to three counts of wire fraud and one count of money laundering, Diehl admitted that he caused losses of just over $5 million. He now awaits a Sept. 28 sentencing hearing.
Diehl was initially charged and arrested in this case in March 2008. After being freed on bond, his bond was revoked in January after he attempted to enter into a real estate transaction for a $3.5 million house using a false name and someone else's Social Security number.
Some key points in an FBI press release on the case follow . . .
According to a plea agreement in the case, Diehl falsely represented himself to potential clients as a banker who made "hard money loans" to businesses or individuals. Diehl also admitted that he fraudulently collected deposits for lines of credit for people who desired financing for construction and development projects in Mexico.
In relation to the "hard money loans," Diehl told investors that he would pool their funds and make secured loans to individuals or businesses that had shortterm cash needs. Instead of using investor funds to make loans, he used investors' money to repay earlier investors and to fund his lifestyle.
In relation to the second part of his scheme, Diehl told victims involved in construction projects in Mexico that he could secure multimillion dollar lines of credit. Diehl told one victim that it would cost $1.175 million to secure a $24 million loan and that the deposit would be used as collateral for the line of credit. The victim eventually paid Diehl $2.5 million, money that Diehl used to pay, among others things, other people who had made investments with Diehl. None of the victims ever obtained a line of credit through Diehl.
As for the sentencing hearing:
At sentencing, Diehl faces a statutory maximum sentence of 20 years in federal prison for each of the three counts of wire fraud and 10 years in prison for the money laundering count.
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Diehl was managing director of Irvine-based ARA Capital, president of the private investment banking firm Diehl & Co. and president of the California division of the American Lending Network mortgage bank, which is "an approved direct mortgage lender through GE Money in Mexico."
But he is perhaps better known locally for his standout seasons at Mater Dei and in the Bay Area at Cal of Berkeley. He joined the Tennessee Titans camp in 2001, but never made an NFL team's opening day roster. Following his playing days, he was also an assistant coach of the offensive line at his high school alma mater.
In September 1994, the Los Angeles Times ran a sports feature before Diehl's Mater Dei faced off against Irvine High School, which included his brother Russ at fullback. The teams had been ranked No. 2 and No. 3 in the county a couple weeks before the game, but Irvine lost a week before facing the Monarchs so a perceived epic matchup lost some luster.
It is still a huge game at the Diehl house, where two upstairs bedrooms are separated only by a wall.
One is Reed's room, decorated with Mater Dei paraphernalia and a poster of O.J. Simpson. The other is decorated with school paraphernalia, but a Jim Morrison poster hovers over the headboard. This room is Russ Diehl's, Reed's older brother by one year.
If the reference to the Simpson poster raised your eyebrow, it did mine as well. The story appeared three months after Nicole Brown and Ronald Goldman were found dead outside Brown's condominium. The "Trial of the Century" did not break Simpson's way until October of the following year.
Here was Reed Diehl's high school scouting report going into Cal: "Played both ways in a highly regarded Mater Dei program that went 44-2 during his four years (1992-95)...earned SuperPrep All-Far West honors as an offensive tackle and picked up BlueChip Illustrated All-Far Western Region accolades as well...named to all-area team by Los Angeles Times and Orange County Register...earned first team South Coast League honors...also started as a junior when Mater Dei was ranked the No. 1 prep team in the country...chose Cal over Arizona, Northwestern and Navy, among others." And when it came to his personal information: "Born Sept. 18, 1978, in Newport Beach, CA...parents are Russell and Diane Diehl...plans to follow in his father's footsteps and pursue a career in investment banking."
According to CalBears.com, Diehl red-shirted in 1996, his first year in the program, playing as a center and offensive lineman on the scout team. He started six games the following season as a tight end used mostly for blocking, although he did catch one 2-yard pass against Washington State. His playing time increased considerably his sophomore season in 1998, including a start at right guard during the season opener against Houston. But his playing time decreased as the season progressed. Diehl started all 11 games at tackle his junior season, his best performance coming when he helped the Golden Bears rush for 248 yards in a stunning victory over UCLA.
By the time Diehl entered his senior season in 2000, he was "the acknowledged leader of Cal's offensive line who made the move from starting offensive tackle to center and seems ready to flourish at that position his senior campaign." At 6 feet 4 and 300 lbs., he was built for the trenches but possessed "the intelligence and savvy to make the calls at the line of scrimmage." He was voted a team captain and would conclude his collegiate career a two time All-Pacific 10 Conference player.
The Berkeley Daily Planet was impressed by Diehl's football and business acumen even back then.
Reed Diehl reads the stock market like a seven-man defensive front. Bull or bear market? Gap-control or blitz package? Bail out or go long? Run block or cut block? Reed Diehl has the talents to read both. As a child playing football, Diehl knew that he wanted to play in college. As the son of an investment banker, Diehl began reading the Wall Street Journal at the age of 12, and is prepared for a career in finance. The only thing between Reed Diehl and that career is an oblong leather sphere that he just can't stop trying to protect.
While attending Cal, Diehl married his wife, Rachel, and they had two children. The player's ability to juggle football, family and academic duties impressed the San Francisco Chronicle.
At 6-4, 300 pounds, he is Cal's best offensive lineman and has started college games at tight end, tackle, center and guard. He has a chance to play in the NFL.
He is a husband to Rachel , the person he knew he would marry the first time he saw her, when he was 16.
He is a father to Preston, a football-crazed 4-year-old boy who wants to wear football jerseys everywhere, who loves hanging out with his father in the locker room to soak in the discussions and the atmosphere, and who has collected hundreds of the smelly wristbands and gloves discarded by players after games.
He is a father to Madison, a delightfully cute girl who has suffered through four scary bouts of pneumonia and who kisses the television screen when daddy's games are on TV.
The Chronicle piece put special emphasis on Diehl parlaying his investment acumen into a comfortable lifestyle for his young family.
He is a financial supporter of the clan, using his talent in the stock market to make ends meet for this family of four.
The latter role is the most unusual. Taking the skills he learned from his investment-banker father and the capital he got from his grandfather when his grandmother died five years ago, Diehl has built a stock portfolio that has supported his family with precious little help from others.
His investment in Internet stocks, particularly eBay, saved him when things seemed bleak two years ago, when he was buying stocks on margin, slowly eating away at a nest egg that could then support his family for just three or four more months. Now, like the mature man he is, Diehl has given up those risky dot-coms and has settled in with blue-chip stocks.
According to this week's plea, somewhere along the way, Diehl obviously moved beyond the relative safety of blue-chip investing.
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