Court rules scientist must pay millions

A renowned entomologist, Evert Schlinger believes so strongly in insect research that he has funded professorships at universities across the U.S. with millions of dollars from his family foundation.

But Schlinger, who for decades has studied a spider-eating fly, was snared in a tangled web of his own making and, with several associates, owes more than $35 million to the foundation that he and the others allegedly defrauded and mismanaged, according to a ruling issued in Santa Barbara County Superior Court.

According to a lawsuit filed by the Schlinger Foundation that he once directed, he lost millions in shaky investments and had a hand in creating bogus churches to shield the foundation’s dealings from government scrutiny. After a five-week trial last spring, a Santa Maria jury agreed and its findings were finalized this week in a ruling by Superior Court Judge Rodney S. Melville.

Now 79, Schlinger has headed the entomology departments at UC Riverside and UC Berkeley. Even in retirement, he tramps through the jungles of Fiji and Madagascar hunting rare insects, and uses part of his home in the Santa Ynez Valley as a laboratory.

In an interview Wednesday, Schlinger said he plans to appeal and cast himself as the victim of bad advisors who stole millions.

“I never took any money at all,” he said.

When foundation funds were used to buy his $2 million farm, he contended it was a legitimate charitable transaction because he and his son Pete intended to raise organic crops for the poorthere.

But a foundation board now composed largely of Schlinger’s former graduate students maintains that the entomologist should have known better.

“What we proved at trial is that in order to get advice this fundamentally bad, he had to get rid of run-of-the-mill prudent advice from local professionals,” said Scott B. Campbell, a Santa Barbara attorney representing the foundation.

Two of Schlinger’s advisors were held liable in the lawsuit but never showed up at trial. One of them, Blair Smith, was a Texan who managed an oil business that went bust after Schlinger had invested hundreds of thousands of dollars of his personal funds, according to court documents.

Smith’s whereabouts are unknown, according to court papers filed last year.

The other advisor, Geoffrey Thayer -- also known as Geoffrey benRichard barAbba -- practiced for five years as a California attorney before starting a fish farm in Temecula and offering seminars on how to set up tax-free religious organizations. He lives in Vermont and could not be reached Wednesday. He has been convicted of wire fraud in an unrelated case, according to court filings.

Why Schlinger relied on the two so heavily still perplexes the attorneys who represented him and his son Pete, the foundation’s chief financial officer.

“When we were preparing the case for trial, we had the same question,” said Edward M. Bialack, the son’s attorney. “In some respects, there was a certain element of naivete. . . . That’s all I can figure.”

Another defendant, Tim Pettinger of Dallas, said in an interview that he was “a little naive” when Smith, whom he knew through church, talked him into managing a Louisiana go-cart company that soon collapsed, taking with it $20 million of the foundation’s funds.

Pettinger also stored more than $1 million in gold coins -- allegedly a “legal defense fund” for the Schlingers -- in a safe in his Texas home.

Started in 1986 with United Parcel Service stock donated by Schlinger’s parents, the Schlinger Foundation in 2000 was worth $43 million, according to court filings.

Now it’s worth about $7 million, its attorneys say. It is unrelated to the Warren and Katharine Schlinger Foundation, which is run by Schlinger’s brother and sister-in-law.

According to the lawsuit, the Schlinger Foundation lost more than $26 million in investments touted by Smith -- mostly in obscure start-up companies that gave Smith 10% of the money he secured for them from the foundation.

In 1998, Smith’s apparent conflict of interest and the foundation’s lack of outside directors drew attention from the California attorney general’s office, which regularly monitors the finances of foundations. Even so, Schlinger ignored two foundation accountants, both of whom resigned, and in 2000 fired his board when members raised repeated objections to the risky ventures Smith was recommending.

Both sides agree that Schlinger learned about using a legal mechanism called the “corporation sole” from Thayer, a self-described pastor whose fish farm in Temecula ostensibly was meant to benefit poor people. Under Thayer’s direction, legal papers were drawn up for the First Fruits Mission, the Faith Works Mission Sacred Trust and other entities in a futile effort to hide foundation funds from further audits by the attorney general.

The “churches” were strictly paper creations, said Campbell, the foundation attorney. Schlinger was listed as “almoner” of one called Living Waters, whose rambling incorporation papers professed a belief in creationism.

“He testified he’d never read the incorporation papers,” Campbell said. “I asked him: ‘You’re one of the world’s leading entomologists -- do you believe in creationism?’ He said, ‘Of course not!’ ”

Campbell acknowledged that he’ll have a difficult time collecting the entire judgment.

On appeal, Schlinger is expected to target Campbell and his firm -- Rogers, Sheffield and Campbell. Schlinger said the firm was called in to help him legally pursue his former advisors, but instead turned against him. Campbell has denied wrongdoing, saying the firm represented the foundation, not any one individual.

Judge Melville did not allow jurors to hear the issue during the trial, but Schlinger’s attorney, Anthony B. Gordon of Woodland Hills, said it would play a major role in his appeal.

steve.chawkins@latimes.com