Laguna Man Charged with Defrauding Investors in Water Park Project

Four men were arraigned Friday for allegedly defrauding investors in a San Clemente miniature golf course and water park of over $1 million.

The four men have pleaded not guilty, but they face as much as 16 to 24 years in prison if convicted.

Christopher Schlegel, 36, Rancho Santa Margarita, was charged with four felony counts of using an untrue statement in the purchase or sale of a security and one felony count of using a device with a scheme to defraud with sentencing enhancements for aggravated white collar crime over $100,000, aggravated white collar crime over $500,000, property damage or loss over $65,000, property loss over $200,000. If convicted, he faces a maximum sentence of 16 years in state prison, according to the Orange County District Attorney’s Office. He is being held on $530,000 bail.

Additionally, Jourdan Tyson Groves, 37, of Laguna Beach, Michael Ruffner, 50, of San Clemente, and Michael Scott Melcher, 55, of San Clemente, are with 12 felony counts of using an untrue statement in the purchase or sale of a security and one felony count of using a device with a scheme to defraud with sentencing enhancement allegations for over $100,000 loss, aggravated white collar crime over $100,000, aggravated white collar crime over $500,000, property damage or loss over $65,000, and property loss over $200,000. If convicted, they each face a maximum sentence of 24 years in state prison.

Groves is out of custody on $1 million bail. Melcher and Ruffner are being held on $1 million bail. All four are scheduled for a pretrial hearing on June 22.

In 2009, San Clemente city officials agreed to lease a portion of the Vista Hermosa Sports Park for two miniature golf courses but later amended the lease to include a wave machine and dining component.

Schlegel, Groves, Ruffner, and Melcher allegedly sought investors and collected more than $500,000 for the Surf N Turf San Clemente project and promised investors a return on their initial investment. According to prosecutors, Schlegel kept the majority of the investment money initially raised for personal use. Groves, Ruffner, and Melcher kept a significant percentage of investor money as commissions, salaries, or payments without disclosing this to investors, prosecutors allege. The defendants are also accused of failing to disclose that the California Department of Business Oversight issued a desist and refrain order against Schlegel for violating the California Securities Laws, which must be disclosed by law.

According to investigators, Schlegel left the project in 2012, but Groves, Ruffner, and Melcher allegedly continued to solicit money from investors for a wave pool project. Prosecutors allege they collected more than $600,000 from investors and used the money for attorney fees, to pay themselves salaries, and for taking large cash withdrawals without disclosing it to investors. Groves, Ruffner, and Melcher are accused of misappropriating investor funds by spending investment money on restaurants, gas, hotels, utilities, air travel and at retail stores.

In 2014, the City of San Clemente terminated the 20-year lease they had previously approved for Surf N Turf Paradiso LLC because of failures to meet deadlines.

All four are scheduled for a pretrial hearing on June 22.