Two plead guilty for roles in PinnFund/PinnLease scheme

By Associated Press

SAN DIEGO (AP) Two former executives of a mortgage-lending firm pleaded guilty Thursday to federal charges for their roles in a massive Ponzi scheme that resulted in losses of more than $200 million for investors.

Keith Grubba, the former president and co-owner of PinnFund USA, admitted that he conspired with PinnFund partners to deceive investors and filed false income tax returns seeking to avoid $2.5 million in payments. Grubba faces up to 30 years in prison when he is sentenced in April.

Michael Trap, a former manager of a related company, PinnLease USA, admitted lying to a federal grand jury investigating the scheme. He faces up to five years in prison when he is sentenced in April.

PinnFund, based in Carlsbad, Calif., collected investments for five years before being shut down by court order in March 2001 following a federal investigation. Investigators said much of the money collected went to support the lavish lifestyle of PinnFund's chief executive, Michael J. Fanghella.

Fanghella pleaded guilty last year to tax evasion and conspiracy to commit fraud and money laundering. He is to be sentenced on Monday and faces up to 30 years in prison.

Four others connected to the case were indicted on Thursday.