2 Charged With Taking Millions From Investors

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, 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 being sought 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%, then diverting the money to their own companies and accounts.

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.

Investigate Investment Ring

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.

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 senior pastor, who hosts 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 Comstock associate Abraham Boldt recruited investors after preaching from the pulpit.

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

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

Some prior investors were also 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 spent money freely on such luxuries as frequent overseas trips and company-leased limousines for shopping trips and chauffeuring guests to parties.

Filing for Chapter 7

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.

Boldt, a Walnut, Calif., resident who the Securities and Exchange Commission alleges was a key partner in the scheme, was not charged by the Los Angeles prosecutors, whose investigation focused on activities of Comstock Financial. Boldt was not an officer of the Universal City company.

But Boldt was indicted last month on fraud charges by a grand jury in Brownwood, Tex., a small town southwest of Dallas that is home to some investors in the company’s Texas affiliate, SEC attorney Stephen Webster said.

Boldt and Wiksell last month signed a consent order sought by the Securities and Exchange Commission in which they agreed, without admitting guilt, not to violate federal securities laws. The SEC is still seeking a court order to recover more than $7 million from Comstock, Wiksell and Boldt.

Face Prison if Convicted

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 face up to five years in prison if convicted, Deputy Dist. Atty. Timothy J. 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 pleaded no contest in the early 1970s to misdemeanor charges of violating California corporate law for distributing unregistered stock.