Mission Viejo Man Arrested in Investment Fraud Probe

A Mission Viejo man has been arrested and charged with felony grand theft for allegedly bilking two dozen investors, including a paraplegic and a Huntington Beach couple in their 60s, of $2.5 million, police said Friday.

Most of the victims who invested their money with Jerome Paul Berenbeim were his “friends and social acquaintances,” Huntington Beach police fraud investigator Ron Pomeroy said. Berenbeim repaid approximately 30% of the total investments, he said.

Several investors said Friday that they either worked for Berenbeim’s wife, Phyllis, coordinator of the Orange County Department of Education’s arts for the handicapped program, or knew someone who did.

Nancy Seiller, 61, said she worked for Phyllis Berenbeim as a secretary until she transferred to another job last January.

“I knew Jerry was a financial adviser,” Seiller said, “and I asked Phyllis if Jerry could help us on advising us for some kind of investment for our retirement.”

Seiller and her husband said that, on Jerry Berenbeim’s advice, they cashed their insurance equities and mortgaged their home, investing the money with Berenbeim. After a while, they said, their interest checks bounced.

“We never even asked for a promissory note, partly because we knew him, but mostly we knew her,” Nancy Seiller said.

Arrested in Van Nuys

Police said Jerome Berenbeim, 54, was arrested at a Van Nuys coffee shop about 10 p.m. Tuesday night and booked into the Huntington Beach City Jail on a warrant charging him with nine counts of grand theft. The warrant was signed by Orange County Municipal Judge A. N. Mc Kone, Pomeroy said.

Berenbeim was released from jail Wednesday morning after posting $25,000 bail and is scheduled to appear for arraignment next Wednesday in West Orange County Municipal Court, Pomeroy said.

Phyllis Berenbeim has not been implicated in the alleged frauds, said Pomeroy, who led the investigation.

Berenbeim’s arrest capped a 2 1/2-year investigation by fraud detectives into what Pomeroy alleges was a “classic Ponzi scheme” operating between 1980 and April, 1983. Money from new investors was used to make payments to previous investors, he said.

Pomeroy said Berenbeim, a self-employed financial consultant, persuaded people to invest in “what he called the Fund by promises of unusually high returns on their investments.” Pomeroy alleges that the Fund never existed. He said the largest single investor lost $300,000. The investment agreements all were verbal, Pomeroy said, although some of the investors held promissory notes.

Pomeroy said 18 search warrants were served for the Berenbeims’ homes and several banking institutions, through which checks were traced.

The Berenbeims, who have two children, could not be reached for comment Friday despite repeated attempts at both their lake-front Mission Viejo town house and their Lake Arrowhead home.

Kristen Keefe, 25, of Fullerton, a graduate student, said she met Jerry Berenbeim in 1982 through her mother, who works with Phyllis Berenbeim.

Keefe’s legs were partially paralyzed in a 1977 car crash, and she is confined to a wheelchair. She said she received a $150,000 payment in 1982 as part of her settlement from that accident. She still receives other monthly checks from the settlement.

“I received the settlement in early January,” 1982, Keefe said Friday. “I handed it over to Jerry in late January.”

Keefe said Berenbeim paid her $3,000 a month interest on her investments and was to pay her the $150,000 investment in full in a year. His checks, she said, began to bounce in April, 1982.

She won a civil suit against him in 1983 in Orange County Superior Court, she said, and was awarded about $250,000, “but I was never able to collect on any of it.” Berenbeim, she said, had no assets that could be liquidated.

Nancy and Fred Seiller began meeting with Jerry Berenbeim in 1982 for advice on investing their nest egg, she said. Fred Seiller, 60, was still working for the Federal Aviation Administration at the time, though he has since retired.

According to Nancy Seiller, Berenbeim told them to cash in the equities of their life-insurance policies so he could invest the money in the Fund. He also allegedly told them to take a $35,000 loan on their home so he could invest that money, too, Nancy Seiller said. The couple’s house payments jumped from about $400 to $885 a month.

“Supposedly, the interest on the investment was to make the house payments,” she said. “It did for a few months. Then the checks started bouncing.”

Pomeroy said the Seillers lost about $66,000. The Seillers say it was more like $67,300.

Because they cashed their insurance equities, they are also having to repay that, too, Nancy Seiller said.

“We will probably lose our home,” she said.

Times staff writer Robert Schwartz contributed to this story.