LOS ANGELES -- A man accused along with his mother of operating a carpet-investment scheme that bilked hundreds of investors of an estimated $5 million was convicted Thursday in federal court of 20 counts of mail fraud.
Harold M. Pruett, 47, was convicted after a six-day jury trial and faces five years in prison and a $1,000 fine on each of the 20 charges.
Sentencing was scheduled by U.S. District Judge Terry Hatter for May 19.
His mother, Gertrude Pruett, 67, remains a fugitive. She dropped from sight when the investment-scheme collapsed five years ago.
The Pruetts operated Investors Research Services Inc. in Beverly Hills between 1980-81. They enlisted mostly elderly people to invest in a plan to buy huge amounts of carpet at bargain prices, and then resell the carpet to builders and developers for profits reaching 60 percent per year.
Assistant U.S. Attorney Ronald Nessim said evidence at the trial showed most of the millions invested with the Pruetts went to support a lavish lifestyle that included private airplanes, limousines and property in West Hollywood, Malibu and the Santa Barbara area.
Some of the money also went to promote an entertainment career for Harold Pruett's son, Harold Jr., who was 12-years-old when the scheme collapsed, he said.
The prosecutor said the Pruetts operated a version of a 'ponzi' scheme, in which early investors were allowed to make profits as an inducement to invest more money and recruit new investors.
After the company closed its offices in July 1981 and investors could not reach the Pruetts, some filed lawsuits and the FBI and Beverly Hills Police Department began an investigation that led to his indictment last year.
Pruett remains in custody without bail.