Man Arrested in Fraud Case

A former golf-equipment promoter from Orange County was arrested on criminal charges of bilking $28.4 million from investors who thought they were buying into a promising Internet company, federal authorities said Monday.

Colin Nathanson, 56, who was indicted under seal last week on six federal counts of mail fraud, was arrested Sunday night at his home in Ladera Ranch, said Laura Eimiller, a spokeswoman for the FBI. He was being held at the city jail in Santa Ana.

Nathanson previously settled a fraud case involving the same investments brought by the Securities and Exchange Commission in his former role as president and chief executive of Giant Golf Inc. and Play Big Enterprises Inc., which sold golf clubs and accessories.

He appeared Monday before Robert N. Block, a federal magistrate judge in Santa Ana, who scheduled a bail hearing for Thursday and arraignment for next Monday.

According to the indictment, Nathanson used telemarketers to promote a supposed privately held Internet-based company that he claimed would go public or be acquired.

Nathanson allegedly told investors that a confidentiality agreement precluded him from disclosing the identity of the company, which Assistant U.S. Atty. Robert J. Keenan, the federal prosecutor on the case, said was a “fictitious business entity.”

Instead, Nathanson used the money to finance his unprofitable golf businesses and pay for personal expenses, including gambling and three houses in Coto de Caza and Trabuco Canyon, Keenan said.

In the previous SEC case, filed in March 2004, Nathanson was charged with misleading investors about his unprofitable Giant Golf and its successor, Play Big Enterprises, which sold oversized golf clubs and operated an academy in Las Vegas, SEC attorney Karen Matteson said.

Nathanson also was accused of using various companies he owned to defraud investors in advertising, software and interactive video ventures.

Nathanson agreed to settle the SEC fraud case in September 2004 by repaying investors $4.7 million. He didn’t have the money in cash, so he agreed to forfeit 15 financial accounts and his three Orange County homes.

He also surrendered his personal golf gear and memberships in the Coto de Caza Golf & Racquet Club and the Mission Viejo Country Club.

Keenan said Nathanson, a citizen of South Africa, was a flight risk. Keenan said he would ask the judge at Thursday’s hearing to hold him without bail.

Nathanson’s attorney, Craig Wilke of the federal public defender’s office, declined to comment.