Search for Evidence of Fraud by R. G. Reynolds : Officials Raid Offices of Investment Guru

Armed with search warrants, U.S. postal inspectors Thursday swept into the Burbank headquarters of R. G. Reynolds, a charismatic financial adviser whose commercial radio and television programs have been carried across the nation since late 1985.

Federal officials said the inspectors seized assets, including some rare coins and several company bank accounts, while serving warrants at 11 locations in Los Angeles and Kern counties. Reynolds, 40, was not arrested or charged.

According to court documents, the case involves sales of $1.5 million in “worthless” gold ore, as well as “low-grade” coins and “inferior” gemstones, in what a postal inspector alleged was a “boiler room fraud operation.”

Inspector Charles M. Yarton’s affidavit quoted several confidential informants as saying Reynolds’ salesmen “routinely joked” about large investments made by investors in the allegedly fraudulent Moreland gold program promoted on Reynolds’ broadcasts.

“In addition, I have numerous complaints from victims, detailing their misfortune about the Moreland program and other investments offered by R. G. Reynolds,” according to the affidavit, which quoted some of the complaining investors by name and gave details.

The affidavit said Reynolds converted large amounts of investor money to his own use, adding that in the presence of one confidential informant, Reynolds gambled and lost as much as $40,000 in investor money at one time at Lake Tahoe casinos.

No one answered telephones at Reynolds’ offices Thursday afternoon. However, in an interview with KNBC-TV on Thursday, Reynolds insisted that he was innocent of wrongdoing.

Reynolds had a meteoric rise in broadcasting, starting a program on KIEV-AM radio in October, 1985, for which he bought air time and sold time to his own sponsors. The show, called the “Reynolds Rap,” also was carried on other radio stations around the country, especially in the West.

Last November, Reynolds launched a short-lived television program on the Tempo cable network that was to be carried in all 50 states. However, Reynolds dropped the show after about six weeks. A Reynolds public relations spokesman, Phil Paladino, said at the time that the public response had been “zip.”

Reynolds earlier had appeared in Southern California on a weekly television program on KSCI Channel 18, which he dropped when he went on cable. His new show was not carried on Tempo cable outlets in Los Angeles.

In interviews by The Times for a story about him published last Oct. 26, Reynolds acknowledged that he left Florida in mid-1985, owing about $200,000 to a dozen elderly investors there. He also had a record there of several bad check charges, which had been dropped after restitution was made. Records there showed he changed his name in 1980 to Richard Reynolds from Richard Fernando Gonzales.

As reported, Florida records showed that Reynolds had been stripped of his state insurance license in absentia in May, 1983. A year earlier, he had left his native Florida for Burbank during personal bankruptcy proceedings. He began using the initials “R. G.” in business while in California.

Reynolds’ hallmark has been a bantering, down-home style of chatting with listeners who were invited to call in questions and comments during the live programs. He also conducted financial seminars here and in Las Vegas, to which hundreds paid to hear advice on how to invest their savings.

James R. Asperger, an assistant U.S. attorney here, said his office received the current case for criminal investigation after an “extensive” investigation last year by the regional office of the Securities and Exchange Commission.

The search warrant affidavit alleges that Reynolds is being investigated for securities fraud, mail fraud and wire fraud, along with his Burbank-based R. G. Reynolds Enterprises and R. G. Reynolds Financial Network.

A major focus of the affidavit was on the Moreland gold program, involving a Kern County mining operation conducted by Reynolds associate William Moreland. The state Department of Corporations obtained a court order last spring that closed the Moreland operation.

About 200 persons invested an estimated $1.5 million in “this gold scheme,” Yarton’s affidavit said. It added: “To date, no ore has been refined; no gold has been produced; nor have I been able to verify that any money has been refunded to any investor.”

The affidavit said Reynolds also has been selling rare coins at inflated prices to investors and “providing fictitious coin certificates.”

His “apparent fraudulent activities” also include so-called management and loan accounts, the affidavit said. It quoted confidential sources as saying Reynolds “enticed” people into giving him hundreds of thousands of dollars on his promise to invest it, adding: “In reality, he converted their money to his own use.”