Imposing Financial Adviser Lived the Good Life While Some of His Prominent Clients Are Left Shattered--’Too Old to Start Over’

Stephen H. Henry was living the good life, L.A.-style. And it was a very good life, indeed.

The 41-year-old financial adviser surrounded himself and his family with pounds of Beluga caviar and magnums of Dom Perignon. Four impressive homes. A 33-foot yacht. A Rolls-Royce Silver Spur. A safe stuffed with jewelry. A closetful of furs.

He bought $5,000 shotguns, handed out $100 tips, belonged to three country clubs, chartered planes.

And since he was doing so well for himself, his clients thought he was doing just as well for them.

Henry specialized in giving $300-an-hour advice to hundreds of prominent professionals, especially to physicians. He would set up their retirement plans and educational trusts for their children. He even asked KABC-TV reporter Cynthia Allison, one of his investors, to give his daughter “college tips” about Allison’s alma mater, USC. “He was a big teddy bear of a guy who was warm and friendly yet very sure of himself,” Allison said.

They were more than just Henry’s clients; they thought they were his friends. He ate dinner with them, held meetings in their homes, attended their relatives’ funerals.

Facing Prison Term

He also stole from them. Henry pleaded no contest to 10 felony counts of grand theft, the equivalent of a guilty plea, and will be sentenced May 5 in Superior Court. He could receive a maximum sentence of 10 years in prison and stiff fines.

At least 38 of Henry’s clients lost most or all of their pension plans or educational trusts, ranging from $55,000 to $700,000. The financial adviser admittedly embezzled $4,515,619 from them in four years.

He stole from customers who were widowed, ailing, elderly, famous. He even stole from his best friend. “He showed absolutely no mercy or compassion for anyone,” explained attorney Burton McCullough, the banking law expert who is helping 35 of the swindled clients unravel the financial mess. “He just grabbed the money and spent it on the high life, not caring at all about the people he took from.”

But he took more than their money and betrayed more than their trust. He stole, in the words of one victim, dermatologist Gustave Hoehn of Pasadena, “from my past and my future.” The wheelchair-bound dermatologist expected to retire on his 70th birthday but now has to go back to work.

Can’t Pay His Bills

A 69-year-old widow now has to live on Social Security even though her husband died leaving her well taken care of. A once-rich anesthesiologist too ill to work now realizes he is destitute and cannot pay his bills.

“Some of his investors’ financial lives have been shattered because they’re too old to start over again,” said Los Angeles Deputy Dist. Atty. Frederick Stewart, the prosecutor in the case. “People now in their retirement years are having to sell their homes or finding they have no retirement plans after having worked for 30-some years.”

“I’m flat busted,” said Dr. Elvin Oblander, 67, who determined Henry took him for $678,000. “I lost the most of anyone.”

“I think I know now what it feels like for a woman to be raped,” said Henry’s best friend and neighbor, Roger Dahl, who lost $385,000, “because I’ve been absolutely raped emotionally and financially by Henry.”

After verbally confessing to his embezzlement, Henry wrote to his victims asking them to remain his clients. And, this month, he has been phoning his former customers, including some of his swindled victims, from the Men’s Central Jail and asking them to put up his $750,000 bail, according to McCullough.

So far, all have refused.

Indeed, few would have recognized Henry, who once cut an impressive figure in his hand-tailored suits and $300 Bally shoes, when he appeared in court April 3, his hulking 6-foot-7, 280-pound figure squeezed into a canary-yellow jump suit that indicated he was being kept in the jail’s hospital infirmary under a constant suicide watch.

Details surrounding the embezzlement emerged from the D.A.’s office, investigations by McCullough on behalf of his clients and interviews with the victims themselves. Henry’s attorney did not respond to repeated attempts by The Times to reach him. And Henry so far has not granted any interviews.

According to the D.A. report, Henry stole from his clients from May, 1982 to July, 1986. He was working as a financial consultant with the mid-Wilshire partnership he started in 1970, Henry-Evans and Pierce Co. No criminal charges have been filed against the firm or his partners.

Henry often boasted how he and his partners had started their company “with nothing,” charging a relatively low $22 an hour, and “starved for five or six years building things up” through recommendations and word of mouth.

Profiled in USA Today

By the 1980s, Henry was specializing in the financial affairs of physicians, who along with other self-employed professionals had neither the time nor often the expertise to manage their incomes, make investments or plan for their retirements. In 1985, USA Today profiled Henry, who claimed to be a crusader “fighting” for the financial welfare of Southern California physicians and bragged that his company was grossing more than $1 million annually.

Henry organized “defined benefit pension plans” in which savings would be invested in bank-issued “matching fund” certificates of deposit. He maintained he could obtain the CDs at more favorable interest rates because a major utility was investing its funds. He also boasted, according to McCullough, about his “close relationships” with three Los Angeles-area banks--Union Bank, First Professional Bank and Wilshire Bank.

The client wrote checks payable to one of the three banks and gave them to Henry to purchase the CDs. As confirmation of the supposed transaction, Henry would send a letter on his company stationery with specific information--the CD serial numbers, the interest rate being paid, the maturity date and which California utility was the purchaser.

In reality, there were no CDs, no interest, not even any pension plans. Instead, Henry was taking the clients’ checks, though they were drawn payable to the bank, and depositing them directly into his own checking account.

For years, Henry succeeded in putting off all inquiries. “Oh, I’ll get you something from the bank,” he assured the clients who wanted more documentation. Or he’d stall them by saying, “I can’t give it to you right now,” or “My secretary has it, and she’s on vacation.”

In other cases, he would scold clients who wanted to withdraw their money for being “childish” because of all the interest they would lose. Or claim that “by mistake” he had rolled over the CDs and tied up their money for another year.

Even now, victims describe Henry as a “charismatic” and “likable” guy. So likable, in fact, that one or two even considered “sticking with Steve” as their financial adviser even after his swindling was revealed.

A main reason no one questioned Henry’s financial expertise has to be his compelling presence. His clients claim that he was imposing personally as well as physically. He spoke with authority. He made decisions quickly. He dominated every situation. “It was almost a little bit intimidating,” Oblander said. “Like, ‘I know more than you. Don’t question me.’ ”

As it turns out, investigators found that Henry fabricated his credentials. He claimed to have a BA from the University of Washington and a master’s in finance from USC. Instead, they found that his only advanced education was three months at the College of the Desert in Palm Springs.

Sometimes Henry bullied his clients. He put the Dahls on a budget so strict it strained their marriage. “It was a sacrifice. We gave up a lot,” Dahl recalled. It didn’t help that by contrast the Henrys were living like Rockefellers.

When the Dahls told Henry they didn’t want to live on a budget anymore, “he got absolutely furious,” Dahl said. “He said we were ungrateful.”

Henry even tried to get Hoehn to raise his fees. “But I kept saying that I’m dealing with a lot of elderly people and I don’t want to squeeze out every dollar,” the doctor explained.

Even so, Dahl said, “this is the kind of guy you’re looking for to handle your money. There was just something of the air of a winner about Henry.”

Certainly, his life style seemed to validate his apparent success.

$650,000 Home

According to investigators, there was his four-bedroom La Canada Flintridge mansion with a pool, wine cellar and a 360-degree view of the city and the mountains that was valued at $650,000. The mountain home at Idyllwild worth about $120,000. The desert retreat in Palm Springs worth about $300,000. The half-share in the $146,000 Maui condo. And the 33-foot Chris Craft, valued at $60,000.

He and his wife of 19 years owned jewelry ranging in the words of McCullough “from mere baubles to really good stuff.”

They had 12 watches in all, including some worth $10,000. Henry’s wife had gold, diamond and gemstone jewelry valued up to $30,000 apiece. Henry himself had an extensive collection, including $2,575 cuff links and a money clip valued at $1,200.

They drove only the finest automobiles, ranging from Henry’s 1984 Rolls valued at $112,000 to his wife’s 1983 Mercedes 380SEC worth $45,000. The antiques in their La Canada home were valued at $125,000. Dahl recalls Henry confiding that he had paid $10,000 for a sofa in their family room.

Henry would brag to clients about spending $1,000 for lunch at Perino’s. Or boast about ordering one of two $1,400 bottles of vintage port in a restaurant. And “promised the maitre d’ that he’d have the other bottle next week,” Dahl recalled.

A devout Lutheran, Henry even showed off his wealth at church. His wife, Susie, would whisper to Carol Dahl, “Look what I got,” and, draping her hand over the pew, flash a new diamond ring or $1,000 Gucci purse.

Paris Shopping Trips

It was not unusual for Henry, his wife and two daughters to take the Concorde to Paris to shop for designer apparel. Henry and his wife even converted an extra bedroom into a his ‘n’ hers closet.

By all accounts, Henry’s wife, described by friends as “a Southern belle type” from Alabama, seemed to be in the dark about her husband’s swindling.

Interestingly, Henry seemed to be making $22,000 a month from salary and investments legitimately, according to investigators. “Now, one would think that type of draw would satisfy his monetary needs superficially. Certainly, to the average person it would,” Stewart maintained.

The reasons for Henry’s thievery are unclear.

Though not born into wealth, Henry was by no means born to poverty. He grew up in Washington State and San Francisco in a solidly middle-class family. His father, who passed away recently, was a newspaper distributor before going into real estate sales in Southern California. Friends say Henry acted as his mother’s financial adviser after he started his consulting business.

‘Insatiable Appetite’

Some of those closest to the case say that Henry stole out of greed. Henry explained to some of his victims that he “had an incredible, insatiable appetite for luxury. He just had to have more and more things to satisfy himself.”

At one point, Henry told some of his victims he stole from them because he had been having “marital problems.” In fact, the couple had separated for a year beginning in 1981.

Finally, last summer, about a half dozen clients were pressuring him for the use of their money or at least some bank documentation. When Dahl confronted Henry last August, Henry seemed genuinely offended.

“ ‘Do you really believe that I’ve stolen your money?’ ” Dahl quoted Henry as saying.

“ ‘Steve,’ ” Dahl replied, “ ‘I don’t know what to think at this point.’ ”

Oblander, meanwhile, had gone to one of the banks with Henry’s letters only to be told there were no CDs with those serial numbers.

Finally, Henry asked four clients with growing suspicions to meet him in his office at 11 a.m., Sept. 29.

But Henry never showed.

“That’s when everyone knew something was wrong,” Dahl said.

Confessed to Best Friend

Henry disappeared for two days. When he returned, he confessed to his best friend, Dahl, that he had stolen money from 38 clients. “I’m sorry. It’s gone. I took it,” Dahl recalled Henry saying.

Sobbing, Henry also described how he had taken out $4 million worth of insurance with the intention of killing himself and then repaying his clients. He said that instead of attending the meeting, he had gone to his mountain home to put a gun to his head. “Steve’s story is he couldn’t bring himself to do it,” Dahl said.

Noted Stewart: “Whether he was at his cabin or not, who knows? He could have been around the block in his Rolls Royce.”

In October, Henry, accompanied by his wife, visited his victims’ homes and tearfully confessed to them that he had taken their money. He and his wife pledged to repay every cent, the victims say.

‘It Was Quite a Shock’

For some, this was the first they knew anything was wrong. “It was the worst news I ever heard. I had always thought well of him and how he was handling my money. I had all these letters telling me how much I was making,” Oblander said. “It was quite a shock to find out the truth.”

A widow recalled feeling “wiped off my feet.”

Another physician realized that at about the same time the financial adviser was consoling him over the recent death of his wife, Henry was taking him for nearly $400,000. When Henry attended the funeral, the doctor thanked him for being such “a great friend and a great comfort to me.”

Henry followed up his personal visits with a form letter dated Nov. 3. “As you may have heard,” he wrote, “I am responsible for the wilful (sic) loss of funds of clients of Henry-Evans and Pierce Co.” He advised that he was “seeking qualified professional, psychological and clerical counseling. In doing so, I hope to overcome my weaknesses and start a new life.”

A Plea to Clients

He also urged his clients to keep doing business with him. “While I cannot condone, rationalize or forget what I have done, I need to start reshaping my work life,” he wrote. “I truly enjoy my work as a business manager for physicians and dentists and the relationships I have been able to build with my clients. I am confident in my abilities and would welcome the opportunity to represent you.”

As for those who decided not to remain a client, “please know that I understand and wish you not only financial success but peace for you and your family.”

Victim Hoehn responded by return mail. “I said I’m sorry to lose the money, but I’m much sorrier for you to be losing your soul over it.”

Soon after, a group of Henry’s victims, described as “extremely anxious, frustrated and bewildered,” hired McCullough to represent them jointly. At a meeting, somebody mentioned that Henry still had the $4 million worth of insurance.

“If he’d killed himself, that would have saved us a lot of trouble,” one victim told the attorney.

Warned McCullough: “If anything happens to Henry, there’s going to be 38 suspects.”

Henry was arrested on March 21 of this year at 7 a.m., just as he was taking his morning shower, and charged with 36 counts of grand theft.

Henry’s attorney has claimed that his client gambled away the stolen money. But others doubt this. “Let’s say I’m skeptical,” deputy district attorney Stewart said. “I’ve seen no evidence to support that assertion.”

Claims Against Banks

Exactly why Henry’s scheme succeeded so long will be the subject of legal wrangling for some time. Though no lawsuits have been filed, McCullough is asserting claims against the banks and others in an attempt to recover the stolen money. He is basing his claims on a California Supreme Court case which held that a bank is negligent when it takes a check payable to itself and allows it to be put into a third party’s account.

Cynthia Allison, who is not represented by McCullough, confirmed reports that she managed to get $90,000 of the $100,000 she lost to Henry back from the First Professional Bank where Henry had deposited her checks.

McCullough says that First Professional has offered to settle with his 35 victims but for considerably less than 90 cents on the dollar. “Some of my clients have asked me why our offers are less than Cynthia’s,” the attorney said. “And I told them that if you were a celebrity, you’d have an offer like Cynthia Allison’s.”

A spokeswoman for First Professional Bank said “it had no comment regarding any of these allegations at the present time. All of the matters that you’re asking about are the subject of litigation or potential litigation and all parties are represented by counsel.”

A Union Bank spokeswoman said “Unfortunately, we cannot comment.”

And Wilshire Bank President Ronald Seifert also declined comment. “We are aware of various customers of our bank who have been victimized,” he said.

While many of Henry’s swindled victims feel “embarrassed” and “disgraced” by the situation, experts are quick to point out that they did not do anything to invite the embezzlement. “It’s hard to say what more they could have done to protect themselves,” Stewart noted. “And since people don’t like to keep large sums of money in the house, they have to trust somebody to keep it for them.”

Cynthia Allison said “this is no different from being struck by lightning or being a rape victim or getting hit by a drunk driver. You’re in the wrong place at the wrong time, and someone just picked you out of the crowd. That’s also what’s really frightening.

“Because I realize no matter how careful I am, it could happen again.”

Large Mortgages on Property

No one is optimistic that all of the stolen money will ever be recovered. On Nov. 18, Henry made a general assignment of his assets for the benefit of all his creditors. In fact, McCullough said, “We’ll be lucky if we can get 10 cents on the dollar out of Henry’s assets” since most of his property had large mortgages. “The way things are going, there won’t be anything left after the attorneys are paid,’ victim Oblander said. “I’m beginning to have to face the facts that I won’t see another dime.”

Now, however, Henry and his wife aren’t cooperating in handing over their assets as fully as they once pledged they would, McCullough said. He noted that Susie Henry is attempting to have her jewelry declared as separate property and Henry is trying to keep his own pension plan and his children’s education trusts exempt from the assignation plan. “People forget I worked for years before I started taking the money,” Henry has told attorneys.

In the meantime, Henry’s family is still living in the La Canada mansion, “which irritates my clients no end,” McCullough said.

Meanwhile, those close to the case speculate that Henry may have stashed away hundreds of thousands of the stolen dollars. “We think there’s money unaccounted for at the moment,” McCullough maintained.

Admitted Stewart: “Nobody knows if the man has opened up a Swiss bank account. When one has flagrantly breached a trust like he has, one is highly suspect.”