Investment Fraud—Colin Nathanson

The former president and CEO of Giant Golf, Inc. and PLAY BIG Enterprises, Inc. has been indicted for mail fraud relating to the sale of $28.4 million in securities in a non-existent internet company.^[1] Colin Nathanson is accused of using telemarketing “boiler rooms” to fraudulently induce several hundred people to invest money in the “Nathanson Investment Trust.”^[2] In so doing, the investors were told, they would acquire an ownership interest in a privately-held “internet based technological company.”^[3] At the outset of the telemarketing campaign, investors were told that the company, the identity of which was never disclosed, was about to conduct an IPO; the sales pitch later changed to tell investors that the company had elected to pursue merger agreements with a larger public company.^[4]

The company, however, allegedly never existed, and investor money never actually acquired shares in any company.^[5] Instead, Mr. Nathanson allegedly poured the money into his unprofitable golf equipment companies, and into “extravagant personal expenses” such as three houses.^[6]

Mr. Nathanson’s indictment relates to an investment scheme what was the subject of a civil enforcement action filed by the SEC last year.^[7]

He faces six counts of mail fraud, which are covered by 18 U.S.C. § 1341. Under section 1341, it is a crime for a person to devise a scheme or artifice to defraud, and then use the nation’s mail system to carry out that fraud. The punishment for a violation of this section is a fine, imprisonment for up to 20 years, or both.

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[1] US Attorneys Office, Former CEO of Giant Golf, Inc. Indicted on Fraud Charges Related to Bogus Investment, Dec. 5, 2005 [hereinafter USAO]; see also E. Scott Reckard, Man Arrested in Fraud Case, L.A. Times, Dec. 6, 2005.
[2] USAO.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] Id.