A local attorney who previously was charged with elder financial fraud has been accused of securities fraud by the state Department of Business Oversight.
The DBO made public Monday a “desist and refrain order” against lawyer Delbert Joe Modlin, whose website describes him as an “elder law advocate.”
The state contends that, between August 2013 and April this year, Modlin unlawfully offered and sold securities in the form of promissory notes for a company called Kool-Pets Inc., reportedly based in Burlington, N.C.
DBO spokesman Tom Dresslar said Modlin was not authorized under state law to sell securities and committed fraud by not disclosing multiple financial problems, including bankruptcies and significant gambling losses.
Dresslar said he has not been able to confirm the existence of Kool-Pets, and did not know how many securities might have been sold regionally.
“Actually, our main goal in this is to stop this guy from doing what he’s doing,” Dresslar said in a phone interview.
When contacted by phone about the recent DBO filing, Modlin said: “I’m not aware of anything like that. I don’t consider them securities. I had three investors.” He did not elaborate.
According to the DBO, North Carolina state records show the sole incorporator of Kool-Pets is Modlin’s son, Jeremy Modlin.
The DBO’s filing claims that Modlin misled investors by telling them that the promissory notes would or could nearly double in value in four years.
In addition, the DBO also alleges that Modlin did not disclose: two separate Chapter 7 bankruptcy filings by him since 2004; two separate criminal filings against him in Placer County in 2011 and 2012; and that since 2010 he lost “hundreds of thousands of dollars” while gambling at Thunder Valley Casino Resort in Lincoln.
The order, originally issued Dec. 16 by DBO Commissioner Jan Lynn Owen, requires the elder Modlin to stop selling “any and all” securities in California. Modlin has 30 days to request a hearing before an administrative law judge. If Modlin does not respond by that deadline, Dresslar said, or if he receives a hearing and the administrative law judge sides with the DBO, the order will become final. At that point, Modlin would be subject to further sanctions.
On Aug. 28, Modlin, whose age was listed as 63, was arraigned in Sacramento Superior Court on felony charges of financial elder abuse, grand theft and securities fraud. The charges were in connection with alleged mistreatment in 2013 of a 90-year-old former North Highlands man and his daughter, then 66, who lives in Elk Grove. At that time, he was being held in lieu of $500,000 bail. He agreed to stop practicing law and seeing clients until the criminal proceedings were completed.
Modlin is also facing criminal charges in Placer County, where he was accused in 2011 of defrauding a frail, elderly Auburn couple and selling their home and assets without their approval. That case was expected to go to trial by early next year.
Call The Bee’s Mark Glover, (916) 321-1184.