David Robert McDonnell, the 74-year-old owner of McDonnell Business Service, was sentenced to four years in federal prison for felony misrepresentation of his clients, liquidating their assets fraudulently and embezzlement of almost $6 million on Oct. 6.
McDonnell pled guilty to one count of wire fraud and for breaking his fiduciary responsibility to the beneficiaries of the trusts’ he was in charge of on Aug. 12, 2024. The Laguna Beach based business had been run by McDonnell since 2018.
Fiduciary responsibility refers to the legal and ethical obligation of an executor to act in the best interests of the persons affected.
The prosecution, led by Assistant United States Attorney Jennifer L Waier, stated McDonnell embezzled the money through his company, which handled the estates of various clients, according to a press release by the U.S. Attorney’s Office of the Central District of California.
“As an executor, McDonnell’s job was to manage the trusts’ assets and – when the individuals died – to sell the assets and distribute the proceeds to the trusts’ beneficiaries,” the press release stated. “Instead of doing this, McDonnell liquidated the assets and diverted funds to his personal bank accounts.”
McDonnell came under fire after a beneficiary from one of the trusts contacted the Laguna Beach Police Department (LBPD) because they didn’t receive disbursements, according to the City of Laguna Beach.
“I’m proud of Detective Joy Butterfield and the investigative team who brought justice to the families who were victimized,” said LBPD Chief Jeff Calvert.
One of the many beneficiaries that were stolen from include UCI, in their pancreatic cancer research center. Other beneficiaries include the Children’s Hospital of Orange County and the University of Southern California, according to the City of Laguna Beach.
As a part of his plea deal, McDonnell admitted to liquidating and diverting approximately $5.9 million from approximately four different trusts, according to the press release.
The Financial Industry Regulator Authority, a non-profit organization that protects investors and the integrity of securities industries within the United States, barred McDonnell.
“FINRA has barred this individual from acting as a broker or otherwise associating with a broker-dealer firm,” according to the FINRA website.
McDonnell’s guilty plea means he acknowledges his involvement in the crime but his final sentence was determined by the court based on the impact of his actions against his victims.
Through McDonnell’s company, he was hired to be the executor of the trusts of high-net-worth individuals and committed wire fraud against the elderly, beneficiaries and multiple charitable organizations, according to the release. Wire fraud is a federal crime involving electronic communication, in this case online transfer, to further a scheme to defraud someone of money or services, according to the United States Department of Justice Archives.
McDonnell, along with his four year sentence, is also required to pay about $5.9 million in restitution, according to The Orange County Register.
McDonnell admitted in his plea deal to multiple accounts of embezzlement. He stated that in 2020, he wrote a check for $300,000 from the trust of a victim to his own personal bank accounts.
The LBPD had to acquire help from the Federal Bureau of Investigation in order to receive forensic accounting, and the United States Attorney’s Office for help in prosecution. Due to the wire fraud charge, McDonnell faced federal prison. The amount of money involved could have resulted in a maximum sentence of 20 years in federal prison, according to the City of Laguna Beach.
Avani Kumar is a news intern for the fall 2025 quarter. She can be reached at avanik1@uci.edu.