Investigations

How Moriarty did it: A risky scheme that soon unraveled

Al Moriarty told investors he was using their money to invest in gold, real estate and loans, but that money actually went into Moriarty’s bank account, according to a detective’s declaration.

The declaration of A.J. Santana, an investigator with the county District Attorney’s Office, was filed with San Luis Obispo Superior Court in May 2013, the same day prosecutors charged Moriarty with seven felonies.

According to Santana, Moriarty had sold annuities to many of his victims over the past 20 years. While those annuities had earned 1 to 2 percent interest annually, beginning in 2007, Moriarty contacted many of these same people and persuaded them to cash in their annuities and make a new investment with Moriarty Enterprises.

He told them he could make them 10 to 12 percent interest annually by investing in gold, real estate and loans to Cal Poly educators. The investments, he said, would be backed by his own gold, real estate and personal life insurance policy.

He started many investors with three-month loans, which Moriarty repaid on time with interest, according to court records. After he paid off the loan, in monthly installments, he would persuade the investor to roll the interest payments and original principal into another, longer-term loan.

“It appears that none of the principal investments were ever paid back to the investors,” Santana wrote. “They were just rolled into larger investments for longer terms, at the recommendations of Al Moriarty.”

Investment funds were deposited into Moriarty’s personal bank account, wrote Santana, and he used the money “to improve his personal real estate holdings and lavish lifestyle.”

According to Santana, Moriarty admitted he would take in new investor money to pay interest on older investor loans. Moriarty has insisted that he intended to invest in real estate, but the real estate market crashed, causing the banks to close his line of credit.

Santana wrote that he never found any evidence to suggest Moriarty purchased gold or real estate for the benefit of anyone but himself. 

  Comments