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Del Biaggio pleads guilty to securities fraud

William "Boots" Del Biaggio III, a venture capitalist and the former co-owner of the San Jose Sharks, pleaded guilty to securities fraud.

The plea, entered Wednesday before U.S. District Judge Charles Breyer, was to charges that he defraud investors of millions of dollars and used the money to pay off gambling debts and live lavishly, including buying a stake on the Nashville Predators NHL team.

Sentencing is scheduled for June 10, and a plea agreement calls for Del Biaggio to possibly spend more than eight years in federal prison.

Del Biaggio, who with his father also co-founded San Jose's Heritage Bank of Commerce in the 1990s, agreed in December to a settlement over a separate civil suit filed by the Securities and Exchange Commission.

The SEC complaint said Del Biaggio defrauded investors, banks and private lenders out of $65 million.

According to the SEC complaint, Del Biaggio fraudulently pledged securities owned by innocent customers of a San Francisco-based broker dealer as collateral for more than $45 million in personal loans.

Beginning in August 2007, Del Biaggio obtained brokerage account statements of unknowing customers with the help of a friend who was a managing director at a San Francisco brokerage firm, the complaint said, and then falsified the account statements to make it appear that Del Biaggio owned the assets in the accounts.

The complaint also said Del Biaggio misappropriated more than $19 million from individual investors he advised. Between 2003 and 2008, Del Biaggio "used his reputation as a prominent venture capitalist and role as the founder and CEO of established venture firm Sand Hill Capital L.P. to entice dozens of his advisory clients to invest in three investment funds he formed," the SEC claims.

In June 2008, Del Biaggio filed a bankruptcy filing showing he owed about $35 million more than he has in assets.

The San Jose financier said he has assets of $53.9 million and $88.4 million in liabilities. The biggest asset listed is his stake in the Nashville Predators hockey team, valued at $23.5 million.

He also listed four homes -- two in San Jose, one in Santa Monica and one at Squaw Creek resort -- worth a total of $12.1 million but with $8.6 million in outstanding mortgages.

Among the largest debts listed by Del Biaggio are $7 million to sports firm AEG Facilities ; $10 million to the former Predators owner Craig Leipold and $3 million to the nonprofit Martha E. San Filippo Foundation in San Jose.

Del Biaggio has been named in a number of lawsuits over about $33 million in unpaid loans, some saying that he put up bogus collateral with the help of a former managing partner at San Francisco investment bank Merriman Curhan Ford.

Those filings have been made by Heritage Bank of Commerce , Valley Community Bank , Private Bank of the Peninsula , Modern Bank , AEG Facilities, DGB Investments , Pacific Capital Bank and Security Pacific Bank .

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