Apr. 26--Federal authorities are trying to seize a Cayucos hotel whose owner is a suspect in a $7 million fraud case. 
 

The U.S. Attorney's Office filed a complaint for forfeiture last month in an effort to acquire the Shoreline Inn, a beachfront property on North Ocean Avenue. Last week, the owners of the inn, listed as the Sexton Children's Trust, were notified by the Internal Revenue Service.  If the prosecution can prove its case, the federal government will gain ownership of the property and sell it, said Assistant

Shoreline Inn Cayucos, California

"We can trace what we believe to be criminally derived money into that property," Welk said. 

By law, he said, the prosecution can seek to compel forfeiture of property if it has benefited from illegally obtained funds. 

The U.S. Attorney's Office has alleged that James Carroll Sexton, one of the title holders of the property, committed a series of frauds using foreign bank accounts. 

Sexton, whose number is not listed, could not be reached for comment Thursday. A manager at the inn had no comment for this story. 

So far, Welk said, Sexton has not responded to the complaint, a civil action that could take several months to resolve. 

According to the complaint, beginning in December of 1997 the following occurred: Sexton established a bank account, along with several sub accounts, in Liechtenstein, a central European country between Austria and Switzerland. Sexton then allegedly induced clients to transfer money to his accounts by making misrepresentations about the services he would provide. 

Sexton had offered to establish accounts for their benefit and to make investments on their behalf. But instead of investing the money, investigators believe Sexton used the money for his own personal gain. 

More than $7 million was diverted into Sexton's account, the government alleges. Roughly $127,000 of that money, according to the complaint, was wired to the Mid-State Bank branch in Atascadero, where it was deposited in the account of a local contractor. That contractor had been hired to remodel 19 of the approximately 30 rooms at the inn. 

Because a portion of the inn's equity is traceable to the proceeds of unlawful activity, the complaint charges, it is subject to forfeiture. 

Sexton has not yet been charged with a crime. But, Welk said, he need not be charged with a crime for the government to pursue the forfeiture. 

According to the Shoreline Inn's Web site, the hotel offers oceanside rooms and suites on the beach, with summer rates ranging between $105 and $150 a night. 

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