4 Ex-Crandall Executives Sentenced for Mail Fraud

Four top-level managers of a defunct Costa Mesa gem and investment company were sentenced in Los Angeles Wednesday on mail fraud charges stemming from a scheme that bilked about 800 customers out of nearly $9 million.

U.S. District Judge Edward J. Rafeedi sentenced Fred Terrazo, also known as Fred Terr, to 10 years in federal prison; Raymond Girard to six years; Frank Lobasso, also known as Frank Bass, to five years, and James McGuire to four years. The men were also given five years’ probation each and ordered to make restitution.

Firm Closed in 1984

McGuire was a senior trading specialist at Crandall Financial Corp., while Terrazo, Girard and Lobasso were all managing brokers for the firm, which has been closed since September, 1984. At that time, the Securities and Exchange Commission filed a complaint accusing the company of fraud and obtained a federal court order placing Crandall in receivership.

Gary S. Lincenberg, an assistant U.S. attorney, characterized the four men sentenced Wednesday as highly placed managers who ran Crandall offices and directed their own teams of sales representatives, in addition to directly bilking unwitting investors themselves.

Lincenberg also alleged that the four men went on to later scams after Crandall was shut down and before they were indicted in May.

“Crandall was shut down, and they didn’t even tell some of these investors what had happened,” Lincenberg said Wednesday. Instead they told investors that the company’s name had been changed, then continued to defraud investors of their savings, he said.

“The 10-year sentence was a very good sentence for Fred Terr,” Lincenberg said. “Terr was nicknamed ‘The Shark’ in the office, and (Judge) Rafeedi did not forget that--the fact that his sales tactics were shark-like. He preyed on victims. Terr and Girard’s victims were older people. . . . They preyed on particularly vulnerable victims.”

Two Lost Their Homes

Two elderly women lost their homes in the Crandall scam, Lincenberg said, and others lost savings that had been set aside to provide for spouses with Alzheimer’s disease and children unable to care for themselves.

The four men sentenced Wednesday were among 10 defendants indicted in May for using deceptive sales tactics to sell gems, money market programs and other investments, and then using the investors’ money without permission, according to court records.

Three of those indicted pleaded guilty and agreed to testify against their colleagues. To date, eight of the 10 have been sentenced. Crandall’s owners, Ronald Allen Smith of Fullerton and his brother, Michael Edward Smith of Fallbrook, are scheduled for sentencing in February.