Newport Beach lawyer Gerald M. Shaw pleaded guilty to federal fraud related to a
“high-yield” investment scheme that took more than $1 million from
victims who were promised rates of return as high as 40 percent a week.
The original charges against the 62-year-old, who plucked some victims from his Corona del Mar law practice, could have fetched him 70 years in the federal pen. The guilty plea to one count of wire fraud likely guarantees a shorter stint.
The FBI statement on the case follows after the jump . . .
July 13, 2010
Orange County Attorney and San Diego Man Plead Guilty to Wire Fraud for Operating a High-Yield Investment Scam That Cost Victims Several Million Dollars
A Newport Beach lawyer has pleaded guilty to wire fraud in connection
with a high-yield
investment program that took in millions of
dollars from victims who were promised rates of
return as high as 40 percent a week. A San
Diego County man also pleaded guilty to
wire fraud earlier this year for his role in the
Attorney Gerald M.
Shaw, 62, of Newport Beach, and Gregory De Lavalette, 54,
formerly of of Rancho Santa Fe, each pleaded
guilty to one count of wire fraud. Shaw
pleaded guilty last Friday, July 9, and De
Lavalette pleaded guilty in February 2010.
Both men were indicted by a federal grand jury
in Santa Ana in September 2007 on
federal fraud and money laundering charges.
outlined a scheme in which Shaw and De Lavalette solicited
investments from victims–some of whom were
clients of Shaw's law practice–by falsely
stating that the money would be used to trade
European bank instruments. The
defendants allegedly told victims that their
money would be held as collateral and that
their money was completely safe. Shaw told
victims that he had successfully completed
high-yield investments in the past and that he
had many satisfied clients. Shaw also
claimed that he traded AA-rated securities and
bonds. The victims were told that their
money would be refunded within 30 days of a
Shaw and De
Lavalette did not invest or return any of the victims' money, but used
it for business and personal expenses.
According to investigators and prosecutors, Shaw
is believed to have defrauded at least 10
investors of approximately $4.5 million. De
Lavalette, who worked for Shaw, is believed to
be responsible for defrauding investors of
Shaw and De
Lavalette are currently scheduled to be sentenced in December 2010
and September 2010, respectively. The wire
fraud count subjects each defendant to a
maximum statutory sentence of 20 years in
prison and additional penalties, including
restitution for their victims.
The case against
Shaw and De Lavalette was investigated by the FBI. The case is
being prosecuted by the United States
Attorney's Office in Orange County, part of the
Central District of California.