SANTA ANA, Calif. -- A Mater Dei High School assistant football coach was arrested Tuesday on a federal charge of bilking a developer out of $2.5 million.
Reed Kyle Diehl, 29, of Coto de Caza, was released on $75,000 bond following an initial court hearing in Santa Ana.
Diehl was represented by a deputy federal public defender for the initial appearance but was informed by a magistrate that he did not qualify for public defender representation, said Assistant U.S. Attorney Doug McCormick.
Diehl was taken into custody by FBI agents at his home Tuesday morning on a federal complaint charging him with wire fraud stemming from an alleged offer to secure a $24 million line of credit if a developer deposited $2.5 million in an account, said Thom Mrozek of the U.S. Attorney's Office.
Diehl allegedly promised the victim, a housing developer referred to in an affidavit as Ron V., who was planning to build a housing development in Cabo San Lucas, that the funds would be used as collateral, FBI Agent Brad Howard said in an affidavit in support of a search warrant.
Instead, he allegedly withdrew all the money and used it, among other things, to pay other people who made investments with Diehl, Howard said.
No line of credit was obtained, Mrozek said.
Diehl is due back in court on April 7 for a preliminary hearing and post- indictment arraignment on April 14.
Howard, a white collar crime investigator, said in the 40-page affidavit that Diehl has been involved, since last year and more than likely as far back of 2005, in a number of financial schemes defrauding victims, including the alleged "advance fee scheme" involving the developer.
The developer and his wife began speaking with Diehl last March.
Diehl initially asked for $1.17 million, but increased it to $2.5 million in July, citing a so-called credit crunch in the United States as the reason. The developer wired the money from his account at Park National Bank in Chicago to Diehl's account in California.
Diehl began making requests that the developer increase the amount, saying he wanted to be ahead of everything and did not want to be the one what caused any delays in the financing.
However, by September, the developer believed Diehl had not been telling the truth about what was happening to the deal, Howard wrote. The developer learned from his lawyer that Diehl's attorney knew nothing about the deal, Howard wrote.
Ron V. missed three closings on the properties, and when he demanded a return of the $2.5 million, Diehl said the money was "tied up" because of the pledge for the line of credit.
In November, the developer visited Diehl at his office in Irvine, demanding a full return. Diehl offered $920,000 from the sale of bonds, and the developer initially declined the offer, but after returning to Chicago, decided he would see if Diehl could actually pay back a portion of the money.
The developer received the check around the Thanksgiving weekend, and when he tried depositing the check into his account, Diehl had placed a "stop payment" order on it, Howard wrote.
According to Howard, Ron V. made a final wire transfer of funds on Aug. 7, and over the next 20 days, Diehl withdrew the money on about 35 occasions, including $25,000 to pay the mortgage on his Coto de Caza home.
In addition to the alleged advance fee scheme, Diehl ran other alleged frauds, such as taking clients' proceeds from equity lines of credit on their homes -- then repaying some with money from the $2.5 million, Howard said.
Additionally, Howard wrote, Diehl also offered investment opportunities, paying 4 or 5 percent a month, to clients.
While it is not clear whether Diehl did, in fact, invest any of the clients' money in any sort of investment, he did repay some with money he fraudulently obtained in the alleged $2.5 million advance fee scheme, Howard wrote.
Diehl played football at Mater Dei and the University of California. He was signed as an undrafted free agent by the NFL's Tennessee Titans in 2001, but released before the start of the season.
