Al Moriarty out of jail, apologizes to fraud victims

In an interview at his son’s home in Santa Barbara, former Grover Beach financier Al Moriarty apologized to his victims and said that he never meant to defraud them.

“All the things you read in the paper were all wrong,” he said. “I never had the chance to tell the whole story.”

Moriarty was released from San Luis Obispo County Jail on Nov. 17. Now that he’s a free man, he says he has moved to Bremerton, Wash., west of Seattle on Puget Sound.

Moriarty, who pleaded no contest in August 2014 to seven felony fraud charges stemming from what prosecutors called an illegal Ponzi scheme, was ordered in December 2014 to pay about 170 investors $10.2 million.

But local authorities are skeptical that Moriarty, 82, will ever be able to repay them. He is scheduled to begin making payments to victims next month in the total amount of $475 per month, according to San Luis Obispo County Assistant District Attorney Lee Cunningham.

The Cal Poly athletics Hall of Famer, who secured many of his clients through his connections at the university, says he is working on an autobiography and plans to sell the rights in order to pay back his victims.

“I don’t lie, steal or cheat — and my book is going to prove it,” he said.

Though Moriarty was sentenced to five years in San Luis Obispo County Jail, he was released from custody early because of various state-mandated credits, ultimately serving less than two and a half years, less than half of which was served after he was convicted, according to Sheriff’s Office spokesman Tony Cipolla. Moriarty was released an additional 30 days early because of ill health, Cipolla said.

Moriarty said he “enjoyed” his time in County Jail.

“I took over the place. They called me the Godfather,” he said. “Not one guy in there scared me. If they beat me, they look like hell. If I beat them, they look like hell. So they treated me with respect.”

Ponzi-type scheme

During his criminal proceedings, prosecutors alleged that Moriarty, who owned Moriarty Enterprises in Grover Beach, operated a Ponzi-type scheme that defrauded about 170 people of roughly $10.2 million. A December 2012 bankruptcy filing, which lists 103 individual investors in addition to banks and other creditors, reported that Moriarty owed total debts of about $22 million.

Investigators eventually determined that Moriarty told his investors he was using their money to invest in gold, real estate and loans when the funds actually were being deposited into his personal bank account, according to court documents and testimony. The district attorney’s lead investigator in the case testified that this was “very unusual and not appropriate.”

Moriarty had sold annuities earning 1 percent to 2 percent interest to investors over two decades, court records show. But around 2007, prosecutors said, he persuaded them to cash in their annuities and make new investments in his gold, real estate and loans to Cal Poly educators that promised returns of between 10 percent and 12 percent.

He started many investors with three-month loans, which he repaid with interest, then persuaded them to roll the interest payments and original principal into another, long-term loan, according to court records. He took those funds and used them to “improve his personal real estate holdings and lavish lifestyle,” the investigator testified.

“That was my money, not the people’s money,” Moriarty said on Jan. 13 in the interview at his son’s home in Santa Barbara.

Where it all went wrong

Moriarty discussed where he said his business dealings went wrong, claiming that his formula to create retirement plans for former teachers and retired seniors was initially solid and backed by his gold assets.

That formula, which court documents show he used to promise his clients 10 percent to 12 percent interest, involved paying old investors with new investor money, prosecutors said — essentially a Ponzi scheme.

“I sink or swim on my own. ... I’m not bullheaded; I’m a competitor,” Moriarty said. “When I played football, I was the nicest guy around. Once I step on that field, I’ll kick your ass.”

Moriarty said his “big mistake” was selling some of his gold in 2005 to buy a home in Nipomo, which he planned to renovate and use as a venue for special Cal Poly-related events. The house reminded his wife of the movie “Gone With The Wind,” he said.

When the housing market crashed in 2008, Moriarty’s assets plummeted and never recovered.

“I got my ass kicked. I got kicked all over the place — talk about losing money,” Moriarty said. “And I had it made, if I didn’t go (into real estate) I would have been sitting pretty right now. I pushed the envelope. It was a good move, but the economy hit me.”

A message to victims

Though Moriarty says he thinks about his investors “every damn day,” he said he blames them for filing civil lawsuits against him before he could recover their money.

“Hell yeah, I got allegiance to them because they trusted in me,” Moriarty said. “Any time they’re going to give you that kind of money, I’m not screwing them, I’m trying to do a good job for them. And I proved it,” referring to the financial services he provided his clients before switching his investment techniques.

“But they went ahead and played up the whole thing that I stole from them because they were trying to get their money,” he said. “If they would have worked with me, I would have gotten it done. But the thing is, I shouldn’t even have been in it. I should have stayed where I was.”

In addition, Moriarty said Cal Poly owed him a debt of gratitude for his philanthropy in building the Alex G. Spanos Stadium, which included a $625,000 donation to the Cal Poly Foundation to build an electronic scoreboard in 2009, even as his financial troubles began to mount. That scoreboard included a 53-foot Moriarty Enterprises banner, which was covered up about a year after his conviction and later removed.

Addressing his victims during The Tribune interview, Moriarty said: “I planned on getting a letter out to you. I had to wait until I got out of jail ... (to say) that I’m sorry all this happened and that I intend to make a movie, and make my book and so forth, and that any proceeds will go directly to my clientele. I don’t want a dime out of it. Because, you know, we’re living on Social Security.”

Moriarty’s wife, Patricia Moriarty, is a member of the Rooney family, which owns a majority stake in the National Football League’s Pittsburgh Steelers.

Despite his health-related early release for a hip problem that requires him to attend physical therapy, Moriarty said his health is “excellent.”

Restitution

After his victims filed the civil lawsuits, Moriarty filed for Chapter 7 bankruptcy in Washington state in December 2012.

The trustee in those proceedings has not responded to numerous calls from The Tribune for information, and the status of those proceedings could not be determined.

According to Assistant District Attorney Cunningham, bankruptcy proceedings are independent from Moriarty’s restitution.

The $475-a-month restitution payments will be collected by the San Luis Obispo County Probation Department, which is working with the District Attorney’s Office to initiate a collections case for Moriarty’s victims, Chief Probation Officer Jim Salio said.

Officials are gathering legal paperwork from victims in the case, and they will be able to pursue damages in civil court, Salio said.

At Moriarty’s sentencing hearing, Moriarty’s former clients packed the courtroom to tell Moriarty of the pain he caused. One victim told him, “I hope your last years on this earth are pure hell.”

Some investors, however, stood up for him, acknowledging that their investments were “high-risk.”

In a December 2012 letter to The Tribune, former client Angela Lintz wrote that “to call Al a scam artist is criminal.”

“I don’t think that man ever did anything willfully to hurt anybody,” wrote Lintz, who lost about $516,000.

On Tuesday, Sehon Powers, 72, one of Moriarty’s investors who lost about $800,000, roughly $550,000 of which was his late mother’s, said that it’s ridiculous to think Moriarty will ever be able to pay off his debts, but Powers said he doesn’t think Moriarty deserves more time in jail.

“I think he’s never going to earn a nickel while in jail, so why not let him out, go to work and try to make some restitution?” Powers said. “I don’t mind him being out.”

However, Powers said Moriarty’s “blowing smoke” when he continues to claim that he could have dug himself out of the financial mess had investors not filed lawsuits in 2012.

“I think he’s fooling himself if no one else,” Powers said, adding: “He’s always been kind of a BS’er — every time you sit down with him there’s a bunch of baloney you’d have to sit through — but I never got the impression he was crooked.”

This story was originally published January 26, 2016 at 1:17 PM with the headline "Al Moriarty out of jail, apologizes to fraud victims ."