Civic Leader’s Financial Fall Crushes Many Who Trusted

Before his arrest last year, O. Monroe Marlowe was, to all appearances, the stereotypical pillar of the community.

A Van Nuys resident for more than 25 years, he was a family man--the father of three and grandfather of five--and a respected church, community and civic leader.

During two decades of membership in the First Baptist Church of Van Nuys, he taught Sunday school and was the church’s administrator, handling the finances for the large congregation. He and his wife of nearly 50 years often were seen Saturdays pruning, planting or tending flowers and plants on the church grounds.

So it came as a shock when he was arrested last year and accused of bilking almost 100 friends and clients of nearly $2 million in a phony real-estate loan investment scheme. The elderly, gray-haired Marlowe appeared so trustworthy, so believable, so distinguished.

Marlowe is scheduled to go on trial on fraud charges Feb. 2 in federal court in Los Angeles. He was arrested July 1 in West Germany, ending a seven-month flight through seven foreign countries. His wife, Evelyn, who was with him when he was taken into custody, is not charged in the scheme.

Sterling Reputation

Before his legal troubles began, Marlowe had enjoyed a sterling reputation, both inside the church and outside in the community. He held a leadership role in evangelical Christian circles outside his own denomination. Through an organization called the Greater Los Angeles Sunday School Convention, he traveled to other churches, giving seminars on how to teach the Bible.

He had served as president of the Van Nuys Chamber of Commerce and the local YMCA board and was active in the Optimist Club, working his way through its ranks to become president of Optimist Clubs International.

Marlowe, who will be 75 in March, had been founding president of two banks--First Citizens Bank in Sherman Oaks and the now-defunct Valley State Bank in Van Nuys. And, for the last several years, he had operated an investment and planning firm and had built up a large clientele that included many longtime friends, business associates and fellow church members.

Some of those same people would later be listed among his alleged victims.

“Who would not believe this man?” asked Dave Donavan of Simi Valley, who invested $20,000--and lost it--with Marlowe. “Here was this old, white-haired gentleman who had started two banks. He was recommended by someone we knew, and what he said made sense. But it was all an out-and-out lie.”

Donavan thought his money, which he said he and his wife had saved to send two of their sons to college, was invested in real estate loans--loans that turned out to be non-existent.

Investors, most of them elderly couples, were told that their money was being used for high-interest, short-term loans to wealthy borrowers who had pledged expensive homes in Malibu, Brentwood, Beverly Hills and Pacific Palisades as collateral. In fact, there were no borrowers, no loans and Marlowe kept the investors’ money for his own use, according to a federal indictment issued against him in April.

All business was conducted by mail, and few of the investors were given the addresses of the homes or copies of the loan papers, said Assistant U.S. Atty. David A. Katz, who is prosecuting the government’s case against Marlowe.

Victims of the scheme asked few questions because they liked and trusted Marlowe, Katz said. Many had known him for years or had been referred to him by a relative, pastor or close friend, he added.

“Unfortunately, because of his charisma and very likable personality, most people never questioned his business acumen,” said U.S. Postal Inspector J. Jill Crivelli, whose investigation led to Marlowe’s arrest.

In Federal Prison

Marlowe has been in Terminal Island Federal Prison in San Pedro since his extradition from West Germany on Nov. 20.

Through his attorney, Stephen M. Hogg, Marlowe has admitted to using a “Ponzi” scheme in the real-estate loan program, making high-interest payments to some investors with the money obtained from other investors.

“He admits he made a mistake,” Hogg said. “He wants to make amends.”

He said his client, who intends to change his not-guilty plea to guilty when he appears in court next month, is attempting to work out an agreement with the government that will “maximize the return” to his victims.

Hogg said an effort is being made to liquidate all Marlowe’s assets and turn over “every dime he has” to the government in exchange for what he hopes will be a reduced sentence. As it stands now, Marlowe could serve up to five years in prison and pay a $250,000 fine if convicted.

Katz said federal investigators also are looking at two other Marlowe investment programs--both losing propositions. One involved commodities, the other windmills in an “electricity park” near Palm Springs.

“There are literally hundreds of victims,” he said. “They all tend to be middle-aged or senior citizens--basically, people who’d met him in his social circles.”

Although some of Marlowe’s investors are from Orange, Ventura and San Diego counties, most are San Fernando Valley residents. They invested between $5,000, the minimum amount allowed, and $110,000 in the loan program, which Marlowe offered monthly in a mailer he sent to his clients.

“There are so many con artists everywhere, but you don’t expect to find them in church,” said investor Owen Gruber, 69, of Woodland Hills. Gruber said he and his wife, Kathryn, had known Marlowe since 1965 when all three were members of the Van Nuys church.

Recommended by Friend

Investor Harold Sletten, 62, a retired Northridge engineer, said Marlowe was recommended to him by a friend active in the Lutheran Brotherhood.

“I was led to believe that what he was doing was very conservative, very risk-free,” said Sletten, who lost more than $50,000 in the loan program.

The interest rates were attractive, ranging from 16% to 20%. Interest payments were to be paid monthly and, at the end of 12 months. The principal supposedly would be returned. No investor recovered anything near the full amount promised, authorities said.

Sletten and Donovan said they received some monthly interest payments. “But those dried up,” Sletten said. “I had the feeling he was buying time, consolidating his resources.”

For several months, Marlowe told investors that the properties securing the loans were involved in foreclosure proceedings, and that repayment of their investments would be delayed, according to court documents.

“The last months he was in Van Nuys, you couldn’t reach him,” Donavan said. “You called his office and got his answering machine. He never returned the calls. You had to go and camp on his doorstep. He’s one slick, old booger.”

In late 1986, the Marlowes moved to Eugene, Ore., and left no forwarding address, Katz said. Marlowe changed his home address to a Van Nuys post office box and put his house up for sale. His wife left a note, dated Nov. 13, with a neighbor saying that her husband had retired and that the couple would be traveling, court documents said.

Located by Investigator

A month later, the Marlowes were located in Eugene by a private investigator hired by a group of suspicious investors. Shortly after that, the Marlowes left the country, first traveling to Vancouver, then to Australia, Singapore, France, Portugal, Spain and West Germany, court documents said.

By this time, postal inspector Crivelli had started her investigation. Although the Los Angeles Police Department and the state attorney general’s office had looked into Marlowe’s activities, authorities decided that the postal service should handle the investigation because it was not confined to county or state boundaries, Crivelli said.

Crivelli and her staff first caught up with Marlowe in Australia, then in Singapore, but he fled just before authorities could arrest him. West German police “got lucky” and arrested Marlowe at an airport in Frankfurt, where he and his wife had gone to meet a daughter, Crivelli said.

Authorities located Marlowe by watching the daughter’s mail, she said.

Through his attorney, Marlowe said he “very stupidly” came up with the phony loan scheme to cover several bad investments he had made, including an office building in Van Nuys, a fig orchard and a tool business.

“He kept digging into everything he had and kept losing,” Hogg said. “Then he got to the stage when he had no more money.”

Marlowe believed that he was “really borrowing the money” investors put in the phony real estate loan program, the attorney said.

“He would create more trust deeds to pay off investors until the whole thing just fell apart like a house of cards,” he said. “It’s such a sad situation.”

Marlowe operated the loan program from late 1981 until late 1985, when a group of investors, including Donavan and Gruber, became suspicious because the monthly interest payments had stopped.

“There was a church meeting in Chatsworth about what to do about Monroe Marlowe right after he skipped town,” Donavan said. “Close to 50 people were there.”

Several other meetings followed, and the private investigator was hired. Gruber painstakingly located other victims.

“We knew him very well,” Gruber said. “He was a very smart man. He never needed to do any of this bogus stuff. He could sell anything to anyone. We liked him so much. It’s just a shame.”

“Some people are still shocked,” Crivelli said.

Cheryl Smith of Valencia said discovering what happened was “like having a hero of mine shot down. Monroe was one of my Sunday school teachers. I’ve known him for years. I don’t care what he’s done. I’d just like to say hello to him.”

The Rev. Dale Scott, a minister at Faith Evangelical Church in Chatsworth, said he had known Marlowe for years and always considered him “an honest, open man.”

Scott said several members of his church were among the investors in the phony real estate loans.

“I think Monroe has done wrong,” he said. “But, from the Christian viewpoint, we need to reach out and help him. We should help him do the best he can to make things right. The money should come back to these people.”

Scott said he feels badly, not only for the investors, but for Marlowe’s family.

“This must have really hurt his family,” the minister said. “They’re still trying to show their love and support, and that must be a difficult thing. They still love the guy, but they can’t condone what he did.”