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being freed on bond, his bond was revoked in January after he attempted to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.

Diehl was managing director of Irvine-based ARA Capital, president of the private investment banking firm Diehl N 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.