SAN DIEGO A mortgage executive accused by the Securities Exchange Commission of stealing $109 million from investors surrendered himself to the U.S. Marshals Service on Wednesday morning.
Michael J. Fanghella, 50, the founder and chief executive officer of PinnFund USA, was wanted by authorities for contempt of court: He failed to appear to answer civil fraud charges lodged against him in March by the SEC, according to the San Diego Union-Tribune.
The SECs complaint alleges that Fanghella and other defendants raised $330 million from at least 166 investors to fund his companys business of underwriting residential mortgages for families with bad credit. Instead, the SEC charges, he spent $109 million of that on his personal expenses.
According to the newspaper, authorities say an additional $95 million covered operating losses at PinnFund, which had 42 offices and more than 400 employees nationwide before shutting down March 23.
The rest of the money, the paper reported, allegedly was used in a Ponzi scheme to cover interest payments to investors.