Task Force Gets 6 Former Brokers in Area Indicted

Six former Los Angeles-area securities brokers were indicted Tuesday on charges of bilking money from clients, unauthorized trading or other fraudulent acts.

Although the money involved in each case is relatively small, they are significant in that they represent the first multiple criminal indictments obtained by the new Southern California Securities and Commodities Fraud Task Force.

The interagency task force, created earlier this year along with other task forces nationwide by U.S. Atty. Gen. Dick Thornburgh, targets insider trading, penny stock fraud and other securities abuses. To enhance the task force, the U.S. Attorney’s Office in Los Angeles has been given three additional attorneys who work full time on securities fraud cases.

The cases “represent conduct that is particularly bad,” said U.S. Atty. Gary A. Feess. “They (the brokers) abused their positions of trust and confidence to enrich themselves.” The defendants, who operated independently, are:

- Peter M. Parrott, 40, of Los Angeles, a former E. F. Hutton broker, charged with bilking two clients out of about $350,000.

- Arnold D. Hornsby, 37, of Inglewood, a former E. F. Hutton broker, charged with diverting about $151,000 from a client.

- James Nishinaka, 31, of Van Nuys, charged with bilking clients out of about $41,000 of their life savings while falsely posing as a Shearson Lehman broker.

- David O. Naulin, 32, of Huntington Beach, a former Drexel Burnham Lambert and E. F. Hutton broker, charged with falsely posing as a broker at Diehl & Co. and squandering about $150,000 from a client through unauthorized trading in index options.

- Carlos Medina-Valenzuela, 37, of Covina, a former marketing representative at John Hancock Mutual Life Insurance Co., charged with diverting about $20,000 from at least 10 clients.

- Kai Sum Tam, 37, of Ontario, a former representative at New York Life Securities, charged with diverting about $62,124 in client funds. Reached by phone, he said he would turn himself in and not contest the charges.

The other defendants could not be reached for comment.