SANTA ANA, Calif. – (RealEstateRama) — Four men were arraigned today for defrauding investors of over $1 million from investors for a project to build a miniature golf course, restaurant, and water park in San Clemente. Christopher Schlegel, 36, Rancho Santa Margarita, is charged with four felony counts of using an untrue statement in the purchase or sale of a security and one felony count of using a device with a scheme to defraud with sentencing enhancements for aggravated white collar crime over $100,000, aggravated white collar crime over $500,000, property damage or loss over $65,000, property loss over $200,000. If convicted, he faces a maximum sentence of 16 years in state prison. He is being held on $530,000 bail and must prove the money is from a legal and legitimate source before posting bond.
Co-defendants Jourdan Tyson Groves, 37, Laguna Beach, Michael Ruffner, 50, San Clemente, and Michael Scott Melcher, 55, San Clemente, are each charged with 12 felony counts of using an untrue statement in the purchase or sale of a security and one felony count of using a device with a scheme to defraud with sentencing enhancement allegations for over $100,000 loss, aggravated white collar crime over $100,000, aggravated white collar crime over $500,000, property damage or loss over $65,000, and property loss over $200,000. If convicted, Groves, Melcher, and Ruffner each face a maximum sentence of 24 years in state prison. Groves is out of custody on $1 million bail. Melcher and Ruffner are being held on $1 million bail and must prove the money is from a legal and legitimate source before posting bond. The defendants are scheduled for a pre-trial hearing on June 22, 2016, at 8:30 a.m. in Department C-55, Central Justice Center, Santa Ana.
On March 17, 2009, the City of San Clemente entered into a 20-year lease agreement with Melcher to use land within the Vista Hermosa Sports Park for two miniature golf courses. On June 7, 2011, the San Clemente city council approved an amendment to the lease to include one 18-hole mini golf course, one wave machine, and a food and beverage concession stand.
Between Feb. 6, 2012, and Dec. 31, 2012, Schlegel, Groves, Ruffner, and Melcher are accused of seeking out investors and collecting money with the intent of using the funds toward the Surf N Turf San Clemente project and promising investors they would see a return on their initial investment money. The defendants are accused of collecting over $500,000 and misrepresenting to investors about investing their money into the project.
Schlegel is accused of keeping the majority of the investment money initially raised and misusing the funds for personal use. Groves, Ruffner, and Melcher are accused of taking a significant percentage of investor money as commissions, salaries, or payments without disclosing this to investors. The defendants are also accused of failing to disclose that the California Department of Business Oversight issued a desist and refrain order against Schlegel for violating the California Securities Laws, which must be disclosed by law.
In August 2012, Schlegel is accused no longer being associated with the Surf N Turf project. Groves, Ruffner, and Melcher are accused of continuing to solicit money from additional investors to invest in a wave pool project. Groves, Ruffner, and Melcher are accused of collecting over $600,000 from investors and using the money to pay for attorney fees, pay themselves salaries, and taking large cash withdrawals without disclosing it to investors. Groves, Ruffner, and Melcher are accused of misappropriating investor funds by spending investment money on restaurants, gas, hotels, utilities, air travel and at retail stores.
On Aug. 20, 2013, the San Clemente City Council voted in favor of amending the lease agreement and approving a 20-year lease to allow Surf N Turf Paradiso LLC to build a miniature golf course, a wave pool, and Oggi’s Pizza in the sports park.
On Oct. 21, 2014, the City of San Clemente terminated the 20-year lease they had previously approved in August 2013 due to the failure to meet deadlines for the project.
The Orange County Sheriff’s Department investigated this case and arrested the defendants on April 8, 2016.
Deputy District Attorney Michelle Lipton of the Major Fraud Unit is prosecuting this case.