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By Eric Heinz
Steven Andrew McKinlay and Kristi McKinlay (who had a certified public accountant license under the last name as Kindred) in Coto de Caza were convicted Tuesday of defrauding investors of more than $3 million in an affinity scheme, according to a press release from the Orange County District Attorney.
Both of them pleaded guilty to the charges, which were negotiated with the court, of 14 felony counts of “selling a security in an issuer transaction without qualification, one felony count of grand theft and one felony count of use of a device in a scheme to defraud,” the release stated.
Steven McKinlay was sentenced to five years in state prison. Kristi McKinlay could be sentenced to one year in county jail and 10 years of formal probation. Her sentencing is to take place Dec. 13.
According to the original court complaint, the two were charged with more than 63 counts of various fraud.
The victims, according to the release, were 15 individuals including a former Major League Baseball player, a family friend who received money after a “devastating personal injury,” and a cancer patient who wanted to secure inheritance for his family. There were sentencing enhancements for committing more than hundreds of thousands of dollars in fraud.
The McKinlays were the owners of God’s Sports Co., which they used as a front to their scheme. They lured investors in from the summer of 2011 to the summer of 2015. They were arrested Dec. 16, 2015 in Coto de Caza.
“The defendants spent investors’ money on $10,000 a month rent for a San Clemente home and $7,000 a month rent for a Coto de Caza home, paying for their daughter’s wedding, purchasing a luxury suite at Angel Stadium of Anaheim, purchasing cars, and paying off old debts and day-to-day expenses,” the release stated. ‘They used investors’ money to donate $50,000 to their church. The defendants also put their relatives and their friends’ relatives on GSC payroll.”
In a December 2015 article, sources close to Kristi McKinlay said she was well-known in the community and people vouched for her ethical practices. Her ex-husband, Don Kindred, told San Clemente Times in 2015 that he believes Kristi was a victim in the case.
According to the Securities Exchange Commission, affinity fraud is an investment scam that targets members of “identifiable groups, such as religious or ethnic communities, the elderly or professional groups.”
People who commit these crimes usually befriend the groups or align themselves with the group in order to gain their trust to make investments.
The Orange County District Attorney provided the following tips to avoid investment fraud:
District Attorney Tips on How to Avoid Becoming an Investment Fraud Victim
“When making an investment decision, it is important to use common sense and remember:
- If it looks too good to be true, it probably is.
- You should always know what you are signing.
- You don’t get something for nothing.
- If you aren’t sure about the investment, talk to a qualified, independent professional.
When listening to someone about a great investment opportunity, ask yourself:
- Why are they offering this to me? Why can’t they get money from the bank?
- Why are they offering me such a great deal when they can get my money cheaper in other ways?
- Can I afford the higher risk for this promise of a higher return?
- Why have other brokers/investors/businesses passed on this deal?
- Has the promoter provided professional references, not including other investors with a vested interest, for the promoter and his investment?
Before investing, always check with the Department of Business Oversight (www.dbo.ca.gov) to find out if the investment has been qualified and the promoters are properly licensed to offer securities. Never turn over your life’s ‘nest egg’ without first discussing it with a qualified, independent professional.”