Restitution Ordered in Alleged Ostrich Scam

A Garden Grove man who sold stakes in an ostrich-breeding business has been ordered to pay $890,000 for allegedly misusing investor money, the Securities and Exchange Commission said Thursday.

A federal judge in Santa Ana ordered David Hudson III to pay back $819,000 in allegedly ill-gotten gains plus $71,000 in interest, the SEC said.

The agency charged that principals of Ostrich Group Inc., in which Hudson was a partner, sold contracts in the ostrich-breeding business while “transferring most of the funds to themselves and their family” instead of buying the birds. Hudson also acted as an unregistered broker-dealer when he sold shares in the business, the SEC said.

Ostrich Group raised $800,000 from more than 80 investors, saying their ostriches would be “generating substantial cash-flow revenues in a very short while,” the SEC said.

The group sold the shares from late 1995 through mid-1997, urging investors to buy the birds in batches of three, which the group promised to care for and breed for meat.

In February, a federal judge in Los Angeles ordered two other principals, Loretta Antrim of Irvine and her son, Patrick Antrim of Dana Point, to pay $820,000.

So far, “we’ve not collected any money from them,” said Joel Kornfeld, the senior SEC trial attorney.