A Newport Beach couple is behind bars after what prosecutors describe as a yearslong, multimillion-dollar fraud operation that bankrolled an upscale lifestyle. The pair was arrested on Thursday, Feb. 26, and now faces 68 felony counts in Santa Barbara County, where judges are also weighing whether the money used to post bail was legitimately obtained.
What prosecutors allege
According to the Los Angeles Times, court filings accuse Byron “Rick” Tarnutzer, 63, and Vonna Tarnutzer, 70, of using bogus accounting and circular bank transfers to pull in more than $6.4 million in loans from Cake Mortgage Company. They are also accused of taking more than $2 million from a neighbor, Mystica Fleury. Prosecutors say Fleury was overbilled by roughly $200,000 for remodeling work and then persuaded to put in a $1.75 million investment that, instead of going into a project, allegedly went to cover the Tarnutzers’ credit card bills and living expenses.
Prosecutors describe a pattern
As reported by the Santa Barbara Independent, the district attorney’s office portrays the Tarnutzers as “practiced, sophisticated fraudsters” who allegedly worked hard to win people’s confidence, moved money through shell accounts to wash it, and leaned on the threat of costly civil lawsuits to squeeze more cash from their targets. The outlet notes that both defendants were being held in county jail on $2 million bail while prosecutors asked a judge to cut off any chance of release as the criminal case moves forward.
Bail, defense, and next steps
According to the Los Angeles Times, the Tarnutzers were taken into custody at their Newport Beach home and were held in lieu of $100,000 bail. Defense attorney Addison Steele told the outlet that his clients do not have a significant criminal history and argued that the disputes grew out of civil business conflicts that should be viewed in that context. Prosecutors, in court filings, counter that the couple has no legitimate income stream that could realistically support their mortgage payments and other obligations, and they are asking the court to keep the pair locked up before trial to avoid any new alleged victims.
Legal stakes
Per the Santa Barbara Independent, the Tarnutzers are facing 68 felony counts, including fraud, conspiracy, grand theft, and money laundering. A conviction on all charges could translate into decades in prison. The case is now in Santa Barbara County Superior Court, where judges will sort through motions about how the couple’s bail was funded and whether they should be allowed any form of pretrial release while the investigation continues.
