2 Top Officers in Investment Firm Accused of Fraud

Fraud charges have been filed against two officers of a Universal City investment firm that allegedly took as much as $5 million from more than 500 investors in California and Texas, many of them fundamentalist Christians whose trust the men had gained.

Charged by the Los Angeles County District Attorney’s Office with three felony counts each of violating corporate securities laws were Roy L. Comstock, 47, former chairman of the now defunct Comstock Financial Services, and David L. Wiksell, also 47, the company’s vice president for investments.

Wiksell was arrested Wednesday morning at his Van Nuys home, but Comstock, a former Granada Hills resident, was still at large late in the day, authorities said. A warrant was issued for his arrest. The men allegedly defrauded investors by promising returns of up to 30%, but then diverting the money to their own companies and accounts.

Among those who invested in Comstock Financial’s programs were members of the First Baptist Church of Van Nuys, where Roy Comstock was a Sunday school teacher. The Rev. Jess Moody, the church’s pastor and the host of a local religious television program, said he invested $40,000.

Money also was solicited from members of Faith Evangelical Church in Chatsworth and New Covenant Community Church in Little Rock, Ark., where congregants said a Comstock associate recruited investors after preaching from the pulpit.

Wiksell is scheduled to be arraigned in Municipal Court today, and prosecutors said they will ask that his bail be set at $5 million, partly because of the amount of money they believe was taken in the scheme. Wiksell’s attorney, Deborah Goodall of Dallas, said Wiksell is not guilty and called the bail request too high.

The criminal charges, filed last week, come two years after state and federal authorities first began investigating Comstock Financial, alleged to have been part of a broader investment ring that collected at least $10 million from more than 600 investors in 20 states, primarily California, Arkansas and Texas. In December, 1985, the U.S. Securities and Exchange Commission filed a civil fraud suit in federal court in Dallas against Comstock, Wiksell, Comstock Financial, a Texas affiliate and four other men.

From August, 1984, to August, 1985, according to authorities, Comstock Financial sought customers for a “Managed Investment Account,” which promised returns of 15% to 30% through the purchase of Treasury Bills. The T-bills, however, were never bought, prosecutors say.

Instead, $2.5 million allegedly was diverted to Wiksell’s Hitech Recovery Systems oil company and $1 million eventually was funneled to a cash account in Switzerland.

In addition, some prior investors were paid off with money raised from later investors, commonly called a “Ponzi” scheme, authorities allege.

Former employees of Comstock Financial have said the company’s officers also spent money freely on such luxuries as frequent overseas trips and the use of company-leased limousines for shopping trips and to chauffeur guests to parties.

Comstock Financial, which boasted in brochures that it could provide a “golden opportunity to help the family compete in today’s economy,” is now liquidating under Chapter 7 of the U.S. Bankruptcy Code. The company has assets of $666,000 in cash, trustee Max Rush said. In addition, Roy Comstock filed a personal Chapter 7 petition last August and has no assets, Rush said.

Comstock and Wiksell were charged by the district attorney with fraud, selling unqualified securities and making false statments in connection with the sale of securities. Both men face up to five years in prison if convicted, Deputy Dist. Atty. Timothy Browne said.

Roy Comstock was active in Christian business programs in Southern California and was the subject of a 1979 biography called “The Down Way Up.” Printed by a Christian publishing house, it portrayed him as a former teen-age car thief who became a successful businessman after discovering Christianity.

Wiksell frequently claimed to have more than 20 years experience in investments, although in a deposition he revealed a less-glamorous past that included selling encyclopedias, vacuum cleaners and water softeners. He also pleaded no contest in the early 1970s to misdemeanor charges of violating California corporate law for distributing unregistered stock.