FORMER NFL PLAYER SENTENCED TO NEARLY FIVE YEARS IN FRAUD SCHEME THAT COST VICTIMS OVER $5 MILLION

US Department of Justice

    SANTA ANA, California – A former high school and college football star who briefly played with the Tennessee Titans was sentenced this afternoon to 57 months in federal prison after pleading guilty to fraud charges related to a $5 million Ponzi scheme.

    Reed Kyle Diehl, 31, of Coto de Caza, was sentenced by United States District Judge David O. Carter, who noted the “extraordinary” harm caused by Diehl’s scheme.

    Diehl pleaded guilty in July to three counts of wire fraud and one count of money laundering, admitting that he bilked investors with promises of high rates of returns on investments in loan programs, including multimillion dollar condominium projects in Mexico. During the course of his scheme, Diehl falsely represented himself to potential clients as a banker who made “hard money loans” to businesses or individuals. Diehl also admitted that he fraudulently collected deposits for lines of credit for people who desired financing for construction and development projects in Mexico.

    In relation to the “hard money loans,” Diehl told investors that he would pool their funds and make secured loans to individuals or businesses that had short-term cash needs. Instead of using investor funds to make loans, he used investors’ money to repay earlier investors and to fund his lifestyle.

    In relation to the second part of his scheme, Diehl told victims involved in construction projects in Mexico that he could secure multimillion dollar lines of credit. Diehl told one victim that it would cost $1.175 million to secure a $24 million loan and that the deposit would be used as collateral for the line of credit. The victim eventually paid Diehl $2.5 million, money that Diehl used to pay, among others things, other people who had made investments with Diehl. None of the victims ever obtained a line of credit through Diehl.

    One of the victims who lost money met Diehl while playing high school football at a time when Diehl was a coach at the school. In late 2007, when the victim was a college student, he invested $15,000 with Diehl.

    Diehl admitted in court that he caused losses of just over $5 million.

    Diehl was initially charged and arrested in this case in March 2008. After being freed on bond, Diehl's bond was revoked in January after he attempted to enter into a real estate transaction for a $3.5 million house using a false name and someone else's social security number.

    The investigation into Diehl was conducted by the Federal Bureau of Investigation.