May 7, 2015 / 1:40 AM / 4 years ago

Former Navy SEAL sentenced to prison for investment scheme

SAN DIEGO (Reuters) - A former U.S. Navy SEAL who pleaded guilty to charges stemming from a scheme to defraud a dozen people out of nearly $1.2 million was sentenced on Wednesday to more than six years in prison.

Jason Mullaney, who served in the Navy from 1993 to 2003 and spent much of his career on SEAL Team Five based in Coronado, California, pleaded guilty in September in San Diego Superior Court to three counts of grand theft and one count of securities fraud.

Mullaney, 43, later sought to withdraw that plea, made as part of an agreement with prosecutors, but was rejected by a judge.

Prosecutors say Mullaney, who had a California real estate license, bought and sold homes for clients – many of whom came from his Navy contacts.

In 2008, he set up Trident Financial Holdings and Acquisitions LLC and began soliciting money from the SEALs he had served with, according to court documents.

Mullaney told investors he was making high-risk, high-interest loans that would garner returns of 24 percent a year, according to the court papers.

But by 2011 his clients had begun asking for their money, and Mullaney was unable to pay, court documents show. Investigators found that he had loaned about a quarter of the money and had spent the rest on houses, cars and gambling, prosecutors say.

Mullaney was arrested in July 2012 and charged with 34 felony counts of securities fraud, grand theft and tax fraud.

Even after Mullaney pleaded guilty, his friends defended him. Defense attorney Patrick Dudley said four current and former SEALs, including two victims, spoke at the sentencing, asking for leniency.

“They spoke about how they know his character and still respect and trust him,” Dudley said. “They understand it was a terrible time economically and that he messed up, but they don’t want him punished.”

Reporting by Marty Graham in San Diego; Editing by Dan Whitcomb and Mohammad Zargham

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