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    United States Attorney's Office
    Central District of California

    Thom Mrozek
    Public Affairs Officer

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    Release No. 10-085

    May 13 , 2010


    SANTA ANA, California – An Orange County resident has been sentenced to 121 months in federal prison for participating in a fraudulent investment scheme with an Orange County attorney that took in more than $61 million before it crashed and caused approximately 140 investors to suffer more than $20 million in losses.

    James Halstead, 63, of Tustin, was sentenced late last night by United States District Judge David O. Carter. In addition to the prison term, Judge Carter ordered Halstead to pay $14,525,993 in restitution, which represents the amount of losses directly attributed to Halstead.

    On September 28, 2009, Halstead pleaded guilty to wire fraud and mail fraud, admitting that he worked with an Irvine attorney, Jeanne Rowzee, 50, to bilk victims who thought they were investing in public investments in private entities (PIPEs) and money market programs. Halstead and Rowzee promised returns of 25 percent to 35 percent every three to four months.

    Halstead and Halstead solicited investments in PIPEs as short-term bridge loans to companies that were in the process of obtaining equity financing for growth. Victims were told that their money would be used to fund the short-term loans, and Halstead and Rowzee claimed they had never lost money in this type of investment. Halstead and Rowzee told victims that Rowzee was an experienced securities attorney and had previously worked for the Securities and Exchange Commission. 

    In reality, the victims’ money was never invested. Halstead and Rowzee instead used the money to make Ponzi payments to some investors and to support their lavish lifestyles. According to court documents, Halstead used $191,005 of victim-investors’ money to buy a Ferrari, more than $1 million to purchase a home for himself in the Las Vegas area, and $162,350 to buy a Porsche.

    When he pleaded guilty last fall, Halstead also admitted defrauding a Newport Beach man by offering phony investments in insurance premium funding. Instead of using the money to fund insurance premiums for third parties, Halstead used the money for his own enrichment.

    When she pleaded guilty in October 2008 to conspiracy and securities fraud, Rowzee admitted that the PIPEs scheme was a fraud, and that claims to investors – regarding the existence of the PIPEs, her experience as a securities lawyer, that she personally performed due diligence on each PIPE, and that they had never lost any money – were false. Rowzee is scheduled to be sentenced by United States District Judge Andrew J. Guilford on December 13, at which time she faces a statutory maximum sentence of 15 years in federal prison.

    The investigation into the PIPE scheme run by Halstead and Rowzee began when victims of the scheme reported the fraud to the FBI’s Orange County office. The investigation into Halstead and Rowzee was conducted by the Federal Bureau of Investigation, which received assistance from the Securities and Exchange Commission.


    Release No. 10-085

    Return to the 2010 Press Release Index