Repayment Ordered in Funds’ Collapse

The principal owner of a defunct Huntington Beach investment firm, accused of operating a $23-million oil-lease swindle, was ordered Monday to pay $125,000 to a Garden Grove couple.

A National Assn. of Securities Dealers arbitration panel ruled that Don Tullio Morandini of Long Beach defrauded Joan and Ron Grosse out of $88,000 in savings and owes them damages plus interest.

Morandini filed for Chapter 7 bankruptcy protection last year, but the panel’s fraud finding probably will prevent his debt to the Grosses from being wiped away, said Montgomery Griffin, who represented the couple at their NASD hearing.

“They can continue to try to collect,” Griffin said. “Without that, the award would be worth about as much as the paper it was written on.”

The Grosses won a $2.5-million civil judgment against Morandini’s company, Beacon Energy Inc., in 1998, but they have not collected a penny, Griffin said.

Morandini’s attorney did not return calls Monday.

The Grosses were among about 1,100 people who invested in 30 funds run by Morandini between 1992 and 1995. In company literature and memos, Morandini promised returns of at least 11% annually and assured clients that their investments were backed by government-insured bonds, Griffin said.

The Grosses invested in 1994, using 40% of Joan Grosse’s IRA, her savings from decades of work as a registered nurse, Griffin said.

At first, Morandini delivered on his promises. The Grosses received about $13,000 in monthly distributions. But in 1995 the payments became sporadic, and in 1996 they stopped altogether, Griffin said.

The Grosses’ case was one of several legal actions filed against Morandini and his company after the investment funds collapsed. In July 1997, NASD arbitrators awarded $122,197 to an 80-year-old Lakewood woman who lost most of her savings in the scheme.