Costa Mesa man pleads guilty to fraud charge

-- Deepa Bharath

A 44-year-old Costa Mesa man pleaded guilty Friday to a federal fraud

charge for his role in a scam in which he and two others pocketed money

from investors who were told they were buying into an automobile loan

portfolio, officials said.

James Cunningham and two others -- Paul Jerome Booth, 73, of Costa

Mesa and Donald Lee Roat, 50, of Waldport, Ore. -- formed a company

called CBN Financial Resources in 1997, which they first operated out of

Cunningham’s Orange Avenue home and later moved to Huntington Beach.

Through the company, officials said, the three defendants sold

nine-month promissory notes that they said paid a 10% interest. Over

about three years, at least 50 people made minimum investments of

$25,000.

Investors were told their money was being used to purchase auto loans,

that all funds were exclusively controlled by a trustee and that the

value of the portfolio of loans was between $13 million and $15 million.

Officials said Cunningham and his partners collected about $2.6

million from the victims, but did not use any money to purchase the auto

loans.

Cunningham faces up to five years in federal prison. He is scheduled

to be sentenced by a federal judge in Los Angeles on April 8.