He Left Friends and Family but Not Their Money

W. Eugene Fitzsimons put in 35 years of hard work as an engineer at General Dynamics. But it wasn’t until he retired that Fitzsimons figured it was finally time to make some money.

So he refinanced his house, drained his savings and, between 1981 and 1983, gave his youngest son, Ken, $100,000 for a few real estate deals.

In exchange for the money, Ken Fitzsimons promised his father that he would turn a tidy profit, and that he would take over his newly ballooned mortgage payments.

But then Ken Fitzsimons vanished. He hasn’t been seen since late 1984.

Eugene Fitzsimons, 72 and in poor health, has had to go back to work to make ends meet, shuttling recreational vehicles between Southern California dealerships.

He feels more anguish than anger. He wonders “what the devil is happening to Kenny.”

Eugene Fitzsimons is not alone.

About 70 other relatives, friends and neighbors also trusted 37-year-old Ken Fitzsimons, a clean-cut, All-American type who was the life of his native Fletcher Hills neighborhood.

They invested at least $4 million, believing his promise that he could make profits as high as 30% in 90 days.

“The guy grew up in our neighborhood; I’ve know him for years,” said Y.H. Honor, a part-time entertainer who refinanced her house to invest $100,000 with Fitzsimons. She’s now teaching part time to meet her mortgage payments.

“I couldn’t for the life of me entertain the notion that Ken would do me in, that he’d deliberately rip me off,” she said. “I’m not stupid, but I was stupid.”

Law enforcement authorities have investigated Fitzsimons but have been unable to make a case.

Investigators for the San Diego County district attorney say they may have a hard time proving criminal securities fraud because Fitzsimons gave his investors only personal promissory notes--much like a simple IOU. Moreover, because so many of Fitzsimons’ investors were friends and relatives, they appear hesitant to file formal charges. For example, the district attorney’s office reports only four formal complaints against Fitzsimons, and court records show that only one civil lawsuit has been filed against him.

Authorities in Silver City, N.M., also have been unable to make a case against Fitzsimons. Fitzsimons and his wife, Mary, moved to the mile-high town at the edge of a national forest in 1980, supposedly to manage his clients’ funds.

By the time Fitzsimons disappeared from Silver City in November, 1984, police were investigating whether he was using his real estate holdings there to grow marijuana.

With an infectious, toothy grin and a personality straight out of Dale Carnegie, Ken Fitzsimons was an outgoing youth who “never met a stranger,” friends and relatives remembered.

He used that personality--boosted by a positive-thinking course a decade ago--to build a successful real estate career.

Fitzsimons was a modestly successful broker who soon discovered that the big money was in buying and selling real estate on his own, using funds he raised from friends and family.

His company, appropriately enough, was called All American Finance Corp.

There were no offerings of securities, no formal prospectus, none of the official paper work most firms give their clients. Just simple promissory notes.

“Ken has the ability to make you believe in him,” recalled Jim Hickey, a Frito Lay delivery truck driver who invested more than $70,000 with Fitzsimons. He was introduced to Fitzsimons through a mutual friend who had known Ken since he was a child.

It was Hickey who organized a meeting of more than two dozen Fitzsimons investors in May, 1985. Three hours before the gathering, Fitzsimons called Hickey--from a phone booth in a city he refused to identify--and told him that he knew about the meeting and said it “wouldn’t do any good,” according to Hickey.

At the meeting, Hickey polled the investors--they had given Fitzsimons at least $3.5 million altogether. Investors in Los Angeles may have chipped in at least $400,000 more, and there has been speculation by some clients that Fitzsimons may have raised millions of more dollars from unknown investors in other parts of the country.

Fitzsimons’ fund-raising style, according to investors and law enforcement authorities, was typical of the classic Ponzi-type scheme in which new investors’ funds are used to pay off existing clients.

Fitzsimons’ investors were first asked to chip in a small amount of money. He later reported that he had made them a profit and urged them to roll over the money and invest even more.

If someone wanted money back, Fitzsimons would deliver it in cash, investors recalled.

Hickey was so convinced of Fitzsimons’ golden touch that he talked his mother into investing $5,000. He even persuaded his boss to invest $4,500.

“He used friends as references,” one investor said. “And he’d take your money and pay the friends.”

Occasionally a client would receive a second trust deed on a piece of property as collateral for an investment.

But when investors tried to record the second trust deed, “you found you were sixth or seventh,” recalled one client. Should a property owner default on his loan payments, a second trust deed holder has second right to the property, after the first mortgage holder. The holder of a sixth trust deed would have the sixth claim.

Hickey received a condominium in El Cajon from Fitzsimons because he wanted to “help our tax write-off--we were supposed to be friends,” according to Hickey.

The condominium was so laden with debt, Hickey said, that he simply gave up ownership.

But he recalled that when Fitzsimons signed over the property deed to the condominium, he signed the names of his parents, who held title to the property.

“He said he did it all the time,” Hickey said.

The youngest of three brothers, Ken Fitzsimons graduated from Grossmont High in 1966, where he was considered a good student and an above-average athlete, lettering in wrestling and participating on the swimming and track teams.

“He was always smiling,” recalled retired English teacher Francis Lea, once described by Fitzsimons as his favorite instructor. “He was an ambitious boy, but he was a quiet one. He wasn’t one of the rebels.”

Perhaps not, but a sturdy streak of individualism seemed to surface in his high school days. His “motto,” according to the Grossmont High yearbook in 1966, was: “A rolling stone gathers momentum.”

He attended San Diego State University, graduating in 1971 with a bachelor’s degree in public administration.

Soon after college, Fitzsimons headed for Europe, where he traveled alone for nine months and worked odd jobs when he ran out of money, recalled one family member.

In 1975, he enrolled in Hypnos Morpheus, a positive-thinking program that “explains levels of consciousness (and) how powerful the subconscious mind is,” according to co-owner Carol Baras. “He was getting his feet on the ground, trying to find his own potential.”

The next year, Fitzsimons obtained his real estate license, state records indicate. His upbeat personality and a natural ability to sell served him well, and friends and colleagues say that Fitzsimons was, by all indications, financially successful as an agent with Century 21, among other firms.

By 1978, Fitzsimons was also buying real estate, putting together syndication packages and seeking funds from investors.

He occasionally returned to Hypnos Morpheus wearing three-piece suits and always driving big, newly leased cars. He boasted that he was “breaking records” selling real estate.

“He brought us presents--flowers, bottles of champagne,” Baras recalled.

Fitzsimons’ financial success was widely known among his real estate colleagues.

“You’d come in at night, and there’d be only one guy calling, and that would be Ken,” recalled a former colleague. “He was there early and on weekends.”

Fitzsimons had become so sure of himself that he had even taken to occasionally leading “positive thinking” seminars.

But in 1980, for reasons his friends and associates either can’t or won’t explain, Fitzsimons moved to Silver City, N.M.--elevation 6,000 feet, situated at the edge of 3.5-million-acre Gila National Forest.

Silver City’s 12,000 townspeople like to describe it as God’s country. It is, in fact, smack dab in the middle of nowhere--50 miles north of Interstate 10, 140 miles northwest of El Paso, 225 miles southwest of Albuquerque and 250 miles northeast of Tucson.

Ken Fitzsimons had little trouble making friends in Silver City.

“When he came by, he was always super exuberant,” recalled one Silver City merchant. “He’d bring the girls in the office candy bars. He reminded me sometimes of a poor rich kid that had all sorts of money and didn’t know what to do with it.”

Except, perhaps, spend it.

Silver City residents recalled that when Fitzsimons “rolled into town in a black Cadillac in 1980” he was looking for land, lots of private land that was “surrounded by forest with water, and isolated.”

In four separate transactions, Fitzsimons bought hundreds of acres of land, making the down payments and the mortgage payments in cash, stashed in brown paper bags.

“The only time I ever (saw Fitzsimons with) a check was $5 for lunch--the rest was always cash, even the property payments,” recalled Bill Rodden, who brokered Fitzsimons’ real estate purchases in Silver City.

Fitzsimons bought 10 vehicles--most of them four-wheel-drive models and most costing nearly $15,000 each--from Silver City’s Chevrolet dealership. Three were never paid for, according to Chevrolet dealer Dick Batey, who personally co-signed for one of the cars, costing about $10,000.

Fitzsimons left Mike Henry and his Foxworth Galbraith Lumber Co. holding the bag for $1,800 in unpaid bills.

Henry readily extended credit after Fitzsimons told him he made $8,000 a month from his real estate business and an additional $18,000 per month as an associate producer with the American Negro Festival Theater Group in Amsterdam. No such organization exists, according to investors who have tried to find it.

Tom Earlywine, owner of an office supply store in Silver City, also remembers Ken Fitzsimons. Earlywine loaned Fitzsimons about $2,000 in 1983. “He said it was an investment . . . he (said) he’d try to make money,” Earlywine said.

Rodden described Fitzsimons as “very intelligent. (He) knows his real estate and knows how to talk to people. He’s a very personable young man--the Dr. Jeckyll, Mr. Hyde type.”

It was the seeming contradictions in Fitzsimons’ life that raised Silver City residents’ suspicions.

For example, his outgoing personality didn’t jibe with his concern for privacy.

“He had dogs--Dobermans and Great Danes, not ranch dogs . . . and he put ‘Beware of Dogs’ signs into the national forest area,” recalled one senior law enforcement officer.

Then there was the main ranch, a 160-acre spread with a two-story rock house about a mile and a half from the main road.

Visitors were greeted first by a padlocked fence near the road, then by a creek that could be navigated only by four-wheel-drive vehicles. The road crossed the creek 12 times on the way to the house.

What piqued authorities’ curiosity, however, was Fitzsimons’ brief but regular stays at one of two Silver City motels.

“He would come in and stay a day or two, then he’d be gone for a day or two, then he’d be back,” recalled manager Carrie Wallen. “He never had reservations; he just walked in.”

He was not always alone.

Often, “cleaned-up bikers and cowboy-hippie types” would check in with him, according to one New Mexico law enforcement source.

One November morning in 1984, a Silver City police officer stopped two of Fitzsimons’ associates near a motel. He told them he knew what they were up to and to “have Kenny give me a call,” recalled a law enforcement source in New Mexico.

Fitzsimons left Silver City that night. He never came back.

Authorities then searched Fitzsimons’ four properties. On one 80-acre parcel, authorities found an elaborate drip-irrigation system, as well as an inordinate amount of rodent poison, typically used by growers to keep gophers, rats and mice away from their crops.

And there were trees, a whole forest of six-foot oak trees that had been cut in half--vertically--as a camouflage.

“He wasn’t growing corn out there,” mused one New Mexico police officer.

A year later, real estate agent Bill Rodden--who had owned one of the parcels--noticed some strange-looking plants sprouting on his repossessed plot.

He called the police, who identified the plants as marijuana.

Although Fitzsimons hasn’t been seen since late 1984, he has made occasional, brief telephone pleas for money.

Bill Rodden said he heard from Fitzsimons in February.

“He told me he wanted $2,000, then he said, ‘Please, send $500 now.’ I told him I didn’t have any money.” Other investors report similar requests for funds.

Fitzsimons apparently still has access to funds, although he may be unaware of it.

There is about $86,000 remaining in a trust account administered in Upland, Calif., by Dr. William Tully. The money, according to Tully, is “for disposal at Mr. Fitzsimons’ request.” He said, however, that he hasn’t spoken to Fitzsimons in about 10 months.

Plus, when Fitzsimons abruptly left Silver City, he walked away from more than $550,000 of hard cash he had invested in his land.

There are lots of tales circulating about what has happened to Ken Fitzsimons: He lost his money to the mob, he made a bad investment in a South American lumber deal, he was kidnaped, he had a brain tumor.

He has been reported living in Arizona, New Mexico, Northern California.

Wherever he is, there are people looking for Fitzsimons--and they aren’t only the middle-class investors from Fletcher Hills.

Soon after he left Silver City, residents report that “a bunch of guys . . . with helicopters looking like they were from Vietnam” stormed into the town, searching for Fitzsimons.

“I’m not sure you’ll ever find him alive,” suggested car dealer Batey.

For the most part, Fitzsimons’ investors remain loyal and refuse to talk about him.

“It’s my business, not yours,” said Myrna Waugh, who, with her husband, Harry, has known Fitzsimons most of his life.

“I don’t want to talk about it,” screamed Marilyn Ayers, a real estate agent and longtime associate of Fitzsimons.

Ken’s brother, Robert, has, through his attorney, also declined to comment. Investors claim Robert was his brother’s bookkeeper.

“Let the district attorney do his investigative work, let him get his thing under way,” said investor Eli Schwartz.

Some investors have not been as accommodating. Early last year, some angry residents printed leaflets advising a “Neighborhood Watch Out” and including a map to Fitzsimons parents’ home.

“Eugene Fitzsimons’ boy Kenny is bad,” the leaflets read. The authors had second thoughts, however, and the flyers were never posted.

But the printed material was indicative of what Eugene Fitzsimons acknowledged is a “strained” relationship with his neighbors.

“We dodge them and they’d like to know what the score is,” he said.

“But we can’t give them any answers.”