Suspended Newport Beach attorney gets 21 months behind bars in fraud case

A suspended Newport Beach attorney was sentenced Monday to 21 months in federal prison for stealing $8.7 million in a loan fraud scheme that sustained a lavish lifestyle and gambling habit.

Sara Jacqueline King, 40, pleaded guilty July 24, 2023, to wire fraud and money laundering.

U.S. District Judge David O. Carter ordered King to pay $8,785,045 in restitution.

King’s attorney, Sam Cross, argued for a sentence of six months behind bars if Carter would not grant home confinement. Assistant U.S. Attorney

Jennifer Waier argued that the amount of money lost by the victims and the fact she was an attorney required a stiffer sentence.

Waier also pointed out the defendant appeared on the “Lady Mafia” podcast to discuss her crimes before sentencing.

Cross argued that King was suffering from an addiction to Xanax and was consuming 10 drinks a day as she played slot machines in Las Vegas to maintain her lifestyle.

“It was important to her to be successful,” Cross said, adding she was caught in a “vicious cycle.”

“The real wealth she had was her family,” Cross said.

King has “lost everything,” including her career as an attorney. Her law license was suspended when she pleaded guilty and she faces disbarment, Cross said.

“She has been humbled and lost everything, except for them,” Cross said of her family and friends at her hearing Monday.

Carter also previously ruled a “default judgment” in a federal civil suit regarding the defrauding of a lender of about $10.2 million.

Since she pleaded guilty “she has been productive,” Cross argued.

King checked herself into a rehabilitation facility and has continued her therapy, Cross said.

She got a job at Nordstrom selling purses but she lost it when her employer found out about her case, Cross said.

Cross also pointed out that King helped prosecutors in the case against John Tamahere McCabe of Kailua, Hawaii, who pleaded guilty on Friday in federal court to scamming an elderly man in Irvine out of $1.8 million.

Waier argued King “sensationalized” her crimes on the podcast and then failed to disclose it to probation officials.

“It was brazen,” Waier said of King’s crimes. “It went on for a long time.”

“How was she able to maintain this lifestyle?” Carter asked the prosecutor.

“She was stealing money and playing the slots” in Las Vegas, Waier said. “She lived on $9 million for a long period of time.”

Waier said the Irvine man in McCabe’s case lost his home and is now living out of a motel. But King did help prosecute McCabe because she had valuable evidence on her smartphone, and she was given credit for that in the punishment that prosecutors advocated, Waier said.

“The government has the far better argument,” Carter said. “This is a lot of money.”

The judge also noted she had a “lavish lifestyle.”

Carter ordered three years of supervised release for King when she is released. She has until July 14 to report to prison.

According to her plea agreement, King Lending purported to “provide short-term, high-interest loans to celebrities, professional athletes and other high-net-worth individuals secured by the borrower’s own assets, including designer handbags, watches, luxury automobiles, yachts and earnings from guaranteed professional sports contracts.”

King recruited investors to fund the business loans, claiming that the investments were secured by the same collateral as the loans, prosecutors said. She promised to hold the collateral and if a borrower defaulted she would sell it to pay the investor in full, prosecutors said.

King said she would keep a percentage of the interest earned from the loans and pass along a percentage to the investor along with the initial investment, prosecutors said.

But she never funded any loan and instead spent the money on herself, prosecutors said.

In the lawsuit, she was accused by British Virgin Islands-based LDR International Limited of giving King 97 loans amounting to $10.2 million from January through October of 2022. In one case, the collateral was a vintage Avengers comic book worth $25,000, the plaintiff said in the suit.

According to the lawsuit, King “spent the majority of the funds loaned by plaintiff to King Lending to gamble in Las Vegas, fund an extravagant lifestyle, and for other personal uses by King. Plaintiff is informed and believes that King moved into the Wynn Las Vegas resort and hotel, lived there for six months, and gambled 24/7.”