Al Moriarty, Grover Beach man accused of fraud, is arrested in Washington

Financier is detained in Washington state on allegations that he defrauded investors

acornejo@thetribunenews.comMay 6, 2013 

Correction: Due to an editing error, two sentences about a lawsuit filed by San Jose attorney David Kraft were inadvertently left out of an earlier version of this story. The information has been added to the story below.

A Grover Beach financial services owner accused of fraud after defaulting on millions of dollars in personal loans was arrested Sunday in Washington state on a felony warrant.

Al Moriarty, former owner of Moriarty Enterprises, is in custody at Kitsap County Jail in Washington state. He is being held without bail.

A felony arrest warrant for eight charges including securities fraud and scheming to defraud was filed in San Luis Obispo Superior Court on Friday. That request was then forwarded to detectives in Kitsap County. A criminal filing Monday in Kitsap County District Court in Washington names Moriarty as a fugitive from justice in California.

Moriarty moved to Washington, where he owns a home, in December. Shortly after the move, he filed for bankruptcy, owing more than $22 million to creditors and dozens of San Luis Obispo County residents who loaned him money.

Moriarty was scheduled to appear in court Monday at 1:30 p.m. in Kitsap County.

Moriarty faces 19 separate civil lawsuits filed against him in San Luis Obispo Superior Court for unpaid payments on promissory notes. The claims, which vary in amount, allege fraud, elder abuse and breach of contract by not repaying loans as promised and a lack of required security licenses needed to make investments.

One lawsuit alleges that Moriarty was running a Ponzi scheme "designed to defraud community members out of their retirement and other savings."

The first civil lawsuit against Moriarty was filed in April 2012 by San Jose attorney David Kraft on behalf of Floyd Cannon.

Moriarty failed to make the required $5,393 monthly payments to Cannon starting in January 2012 for a loan of more than $200,000 dating to 2010, according to the lawsuit.

On Monday, Kraft said the criminal charges will not help his client regain the money that he lost.

“We might have to wait until the criminal charges get adjudicated, and that could take years,” Kraft said. “There is no relief in sight.”

The majority of the lawsuits are based on the same premise: Individuals signed a promissory note with Moriarty that guaranteed them 10 percent annual interest paid back over five years through monthly payments.

The principal of those loans, and any interest, would become due in full if Moriarty defaulted on a payment, according to the lawsuits.

Moriarty is charged with several felonies for issuing those promissory notes, including: fraudulently offering or selling securities; three counts of selling securities with false statements or omissions such as telling investors their money would be secured by gold, real estate and his own life insurance policy; grand theft by embezzlement of investor funds; and two counts of acting as an investment adviser and offering or selling securities without the required licenses.

In addition, two enhancements are also included for an aggravated white-collar crime and excessive taking of more than $3.2 million.

Moriarty, a former Cal Poly football and basketball player who is in the Cal Poly Hall of Fame, is well known for his philanthropy at the university.

In 2009, Moriarty gave $625,000 to Cal Poly for a new state-of-the-art scoreboard at the Spanos Stadium. The name of his business — Moriarty Enterprises — is posted at the top of the scoreboard.

“Any comments by us while legal proceedings are underway would be premature and inappropriate,” said Matt Lazier, Cal Poly spokesman.

Moriarty filed for Chapter 7 bankruptcy in January in U.S. Bankruptcy Court in the Western District of Washington. In the Chapter 7 filing, Moriarty lists his assets as more than $3.7 million, all in property in the South County and Washington state.

That property includes a condo, a triplex, a single-family home and a commercial property in Grover Beach, a million-dollar home and land in Nipomo, and a condo and home in Washington.

Related: Several fraud investigations recently in SLO County

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