Al Moriarty's financial victims: How 100 people lost their savings

Al Moriarty consults with attorney Ron Crawford during a hearing on May 5, 2013.
Al Moriarty consults with attorney Ron Crawford during a hearing on May 5, 2013.

Nearly eight months pregnant, Sasha Del Giorgio visited financial adviser Al Moriarty with her grandfather in 2008, hoping Moriarty could provide the money she would need to spend more time with her unborn daughter.

If her grandparents’ testimonials weren’t enough to persuade her to invest with the Cal Poly Hall of Famer, the gold rings on Moriarty’s fingers seemed to vouch for his success.

“He looked like the real deal,” said Del Giorgio, 38, of Cayucos. “I really believed in this man.”

In an effort to prove his acumen to investor Sehon Powers, Moriarty flashed even more precious metal, pulling out a suitcase full of gold coins.

“That looked pretty good to me,” recalled Powers, 72, of Nipomo. “At the time, gold was worth 1,800 or 1,900 bucks an ounce.”

But just as fool’s gold misled many Gold Rush miners, Moriarty’s gold was both alluring and deceptive. And dozens of investors — mostly seniors, people with Cal Poly connections and high school sports coaches — gave Moriarty money on the promise of 10 percent returns.

While some received interest payments for a while, eventually many lost life savings, retirement money and homes in what the District Attorney’s Office has described as a Ponzi scheme, paying old investors with new investor money. In all, Moriarty’s $22 million in debts included investments by more than 100 individuals.

The 81-year-old Moriarty, who pleaded no contest to seven counts of felony fraud last month, will be sentenced Wednesday when he faces a 5-year term. While a judge will order restitution and a bankruptcy trustee has been selling Moriarty’s property to pay creditors, individual investors aren’t likely to recoup much — if any — of their losses.

“I’ve accepted that there’s going to be no financial recovery,” said J. M. Phillips, 76, of Morro Bay, who lost $225,000 investing with Moriarty.

Long ties to Cal Poly

Moriarty’s roots in the county date to 1953, when he played on a Cal Poly football team that finished the season undefeated, having outscored the opposition 395-65. Primarily a tackle and an end, he also pitched in as a quarterback, guard and kicker.

Dick “The Tank” Mannini, a freshman on the team when Moriarty was a senior, said Moriarty was supportive of his teammates.

“Friendly,” described Mannini, another Cal Poly hall of famer. “Good guy. Good athlete.”

While still a student at Cal Poly, Moriarty, a Long Island, N.Y., native, began selling life insurance, launching a long career in financial services. Football remained an integral part of his life. While Moriarty coached football at Mission Prep, two sons played the sport at Notre Dame. His wife, Patty, is the niece of the late Art Rooney, a founding owner of the Pittsburgh Steelers.

As his personal fortunes grew, Moriarty lived in a 4,700-square-foot home in Nipomo, where he threw lavish parties for Cal Poly events. An avid booster of Mustang athletics, he paid $625,000 in 2009 for naming rights to the scoreboard at Alex G. Spanos Stadium.

Using his connections

As a financial adviser who sold annuities, Moriarty had always used his Cal Poly connections to find clients.

“He said he did that because employment in education is very stable,” said Eric Burdick, associate media relations director for Cal Poly athletics, who first met Moriarty as a Tribune sports editor and reporter 30 years ago.

Prosecutors say Moriarty’s problems began in 2007.

Even though he wasn’t licensed to sell securities — a violation of the law — he encouraged investors to take money from their retirement, savings and mortgage accounts to invest in a more lucrative plan that would earn 10 percent interest annually for five years, paid in monthly installments. After investors “loaned” him money, he told them he would invest their money in gold, real estate and home loans for Cal Poly instructors.

“After several years of annuities, he told us we could make more money by going with this 10 percent, five-year loan,” Powers said.

The District Attorney’s Office would not release a list of victims. But Moriarty’s bankruptcy case tallies 103 individual investors and the amounts they are owed. More than a quarter of the people on the list are connected to Cal Poly as alumni, teachers or athletes. The list is also heavily populated by seniors, high school teachers and high school sports coaches.

Many of those investors were initially pleased with results, in some cases seeing steady 10 percent annual profits for a few years.

“I would say we were happy for about seven years with the returns we were getting,” said Powers, a Cal Poly graduate.

Retired from the aeronautical and space industry, Powers attended a seminar Moriarty put on about 10 years ago. Initially, he decided to invest in annuities, which were earning 3 to 5 percent per year.

Burdick began investing seriously with Moriarty in 2007, after he sold his mother’s house for $525,000.

“When I sold my mom’s house is when Al made contact with me and told me, ‘Here’s what we can do,’” Burdick said.

Moriarty came through initially, paying off a five-year loan at 10 percent annual interest, allowing Burdick to put money in a family trust that helped pay for his mother’s care and helped build retirement funds for him and his two sisters.

Trusting Moriarty

When Moriarty investors were making money, several of them wrote glowing testimonials for Moriarty’s ads, which appeared in Journal Plus magazine.

“The most impressive characteristic about Al Moriarty is his honesty,” wrote Bill Dutton, a former Cal Poly football player and coach, in 2009. Dutton, who first approached Moriarty for annuities in 1988, later lost more than $30,000 in the investment plan, according to the bankruptcy filings.

“Not once has any of his advice been incorrect,” wrote Jerry Dean in 2010. Dean, a retired ag instructor at Atascadero High School, lost $171,000.

In 2011, Mike Zohns, a retired Cal Poly horticulture professor who lost close to $418,000, wrote that investing with Moriarty, his investment adviser since 1990, was the best thing he and his wife had ever done.

Betty Smay, a retired biochemist from Arroyo Grande, offered a similar opinion in 2010: “I can truly say he saved my financial life.”

Reached by phone, Smay said she didn’t want to comment about Moriarty, though she said she now wishes she had not invested with him. She lost $158,000, according to the bankruptcy filing.

After receiving lucrative returns on early investments, many rolled money from one Moriarty loan to the next, hoping — as Burdick said — “you’d get a bigger pot at the end of the rainbow.”

“I had no idea what he invested in,” Burdick said. “As an investor, you probably should know that kind of information, but that was the trust I had in Al. I didn’t need to know that; Al would take care of it.”

Del Giorgio visited Moriarty based on stories from her grandparents, who gave Moriarty several loans.

Her grandmother, a once-prominent banker, knew Moriarty through a business relationship. Familiar with his work, she and her husband, who once owned a carpet supply business, had invested $187,000 that same year.

“I went to see him, and he promised me the world,” Del Giorgio said.

If Moriarty could put her $50,000 investment to work, the single mother thought, she might be able to reduce her hours, spending more time with her daughter, now 6. Eventually, she thought, she could earn money for her retirement and her daughter’s college.

‘In over his head’

Moriarty’s plans were genuine, said Marc Stern, his bankruptcy attorney.

“I don’t think he ever intended to defraud or screw anybody,” Stern said, noting that one of the real estate purchases Moriarty made had valuable water rights that could have paid off richly during the current drought.

“I also think he got in over his head.”

The investments would be backed, Moriarty said, by his gold, real estate and a $6 million life insurance policy.

But he sold his gold to help pay the $625,000 for naming rights to the Cal Poly scoreboard. The life insurance policy listed his wife as a beneficiary. And the real estate market tanked, damaging his line of credit.

“He got caught in the downturn and perhaps made some stupid decisions,” Stern said.

The District Attorney’s Office said Moriarty never used investor money to purchase gold or real estate. Money that didn’t pay other investors, the prosecution alleged, went to Moriarty’s personal bank account.

By the time Moriarty purchased scoreboard naming rights in 2009, the bankruptcy trustee alleges, Moriarty was already insolvent. Unaware of his financial straits, investors continued to provide him loans, often swayed by the testimonials, Moriarty’s experience and his Cal Poly connections.

“He’d been here 50-some odd years,” Phillips said. “It sounded like he had a lot of rentals and investment properties.”

As Wall Street woes looked increasingly grim, investing with Moriarty seemed safer, said Phillips, a 1959 Cal Poly graduate who retired as a ranch and vineyard office manager in 1997.

Fiscally conservative, he and his wife had built a nest egg over 40 years. With Moriarty’s encouragement, they took the money they had invested with the Charles Schwab brokerage service and entrusted it to Moriarty in 2008.

Of the $225,000 he lost with Moriarty, $40,000 had been designated to pay for his grandchildren’s college tuition.

Burdick, who had invested $400,000 from the sale of his mother’s house earlier, rolled that money, plus the interest earned off his first investment, into another $600,000 loan in 2011.

Powers invested around $800,000, including close to $550,000 for his now late mother.

While Moriarty “was a BS’er” who “liked being a big deal,” Powers said, “I never got the sense that he was crooked. And, you know, that’s the mark of a good con man.”

Payments suddenly stop

According to Moriarty’s preliminary hearing, he once told Jon Hitchen, a former Nipomo High School Football coach, that he had so much gold he could build a mini Fort Knox in his house. But at the beginning of 2011, according to the District Attorney’s Office, Moriarty’s gold was gone, and his boasts gave way to pleas for help as his finances began to crumble.

“He would pay me like clockwork,” Del Giorgio said. “And then it started slowing down. And then I started having bounced checks.”

In January 2011, Del Giorgio’s monthly $690 checks from Moriarty ceased for good. As he was urging some investors to be patient, Moriarty asked others for more loans. In October, he asked Del Giorgio’s grandparents for another, shorter-term loan — this one for $40,000.

“I told my grandfather, ‘Don’t do it, Grandpa — that’s fishy,’” Del Giorgio remembered.

Around that time, Moriarty gave Powers several checks, but told him not to cash them.

“He said, ‘Hey, I’m in a pinch. I can’t pay you,’” Powers said, noting that Moriarty asked him to be patient. “I said, ‘Well, OK — do your best, Al.’”

Jon Huss, a former Stanford football player who coached Arroyo Grande High School’s football team to four sectional titles, had received just three payments from his $322,000 investment when the money stopped that January.

“Obviously, it’s a very heinous thing he did to people,” Huss said.

In February 2012, after he’d stopped paying some investors, Moriarty asked Pismo Beach residents Harvey and Betty Jones, who met him at a seminar in 2004, for more money, saying he was in a bind. Six days after they gave him $29,000, he asked for another $10,000, which they also gave him.

The couple, who lost $585,000 total, never saw any returns from those loans.

But Moriarty asked the Joneses and others to be patient, saying he was looking to sell the land with water rights.

“He was pinning his final hopes on a piece of property in Nipomo,” Burdick said.

Around that time, Moriarty also stopped payments to Ken and Angela Lintz, of San Luis Obispo.

Moriarty had regularly paid the couple for more than two years, according to court records. Ken, a 91-year-old World War II and Korean War veteran who retired as a school repairman in Los Angeles, and 92-year-old Angela, a retired key punch operator at UCLA, had first met Moriarty after seeing the Journal Plus ads in 2009.

Having lived through the Depression, Ken Lintz said, he and his wife “saved and saved,” until they had $600,000 to invest with Moriarty.

“It was the most money I ever had in my life,” said Ken Lintz.

While they had always been cautious with money, Moriarty seemed to have a good plan.

“He was paying 10 percent, and people were happy with that,” Ken Lintz said. They were making money as well until January 2012, when the checks abruptly stopped.

Scheme unravels

In April 2012, Moriarty stopped paying Burdick.

“Probably one of the most difficult things I ever had to do in my life was to tell my two sisters what happened with Mom’s money,” he said. “And to this date, I have not heard one peep from Al.”

In December 2012 — as lawsuits began to pile up — Moriarty moved to Washington state, where he’d owned a vacation home since 1985. On the final day of the month, he filed for Chapter 7 bankruptcy. By May 2013, he was an accused criminal, charged with seven felonies.

While the bankruptcy trustee will seek to repay creditors, Moriarty doesn’t have enough assets to pay his debts, which total $22 million.

“The amount of money we’ve raised is nothing compared to what the creditors are owed,” said James Rigby, an attorney for trustee Michael P. Klein.

While sales of Moriarty’s property have raised “very little,” according to Rigby (around $2 million, according to court records) bankruptcy cases give priority to secured creditors, such as banks. Some of the money will also go to Klein and Rigby, who invoiced the court for $26,000 and $86,000, respectively.

As a result, investors are resigned to having lost large amounts of money.

“It took away all the cushion I had for retirement,” Powers said. “Now I’m dependent on Social Security and my home equity.”

Fortunately, Powers never used his home to invest with Moriarty. Phillips remembers Moriarty encouraging people to refinance their homes to invest more money with him.

“I’m just so thankful that we said, “We don’t really need to do that,’” he said. “My heart goes out to the people that did do that.”

Phillips is one of several investors who filed lawsuits against Moriarty. But taking legal action cost him even more.

“It annoys me that I’m out about $10,000 in attorney’s fees,” he said.

Del Giorgio is now happily working full-time in member services for a large retailer. But she’s sad to see her grandfather in a bind. His wife now has Alzheimer’s, she said, and it’s costly to keep her in residential care. While his investment money could have paid for her care, he had to take out a reverse mortgage to support for it.

“My grandfather is devastated,” she said.

Painful lessons

Still, some are more forgiving.

After Moriarty was charged with felonies, Angela Lintz wrote a letter to the editor, which appeared in The Tribune and declared, “To call Al a scam artist is criminal.”

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

Her husband agrees, saying Moriarty’s fall from grace was caused more by the poor economy than fraud.

“He had nothing but good intentions,” said Ken Lintz.

His wife’s children eventually would have inherited the money, he said.

Mannini, Moriarty’s former teammate at Cal Poly, said he wished Moriarty had been more truthful about the investments. But, he added, he doesn’t want to sit in judgment.

“I think when the real estate market went belly up, that’s when this business started,” said Mannini, who lost $25,000. “I made a mistake, and he made a mistake.”

While Cal Poly is working to have Moriarty’s name removed from its scoreboard, Mannini doesn’t think that’s fair — despite Moriarty’s felony convictions.

“I think he did an awful lot of things for the university,” said Mannini, who now lives in Twain Harte. “I don’t think the university should turn its back on him.”

Those who think Moriarty’s name is a disgrace to Cal Poly, however, also believe the financier with golden promises should spend more time in jail.

“It’s better than soaking up the sun up there in Washington,” Phillips said.

Related stories from San Luis Obispo Tribune