Former Banker Pleads Guilty to 12 Counts in Plot to Bilk Investors

A former San Fernando Valley bank president and church leader admitted Monday in federal court that he is guilty of fraud in a multimillion-dollar real estate loan scheme in which about 100 elderly investors were bilked.

O. Monroe Marlowe, 74, pleaded guilty to 12 counts of mail fraud before U.S. District Judge A. Andrew Hauk. In a plea bargain reached last week, the former Van Nuys resident also promised to make at least partial restitution to his victims and agreed to pay a $30,000 fine to the government.

Marlowe, scheduled to be sentenced March 21, faces a maximum of 60 years in prison and a $360,000 fine for the 12 fraud counts. He has been in custody since he was arrested in July in West Germany, ending a 10-month flight through seven nations.

Marlowe admitted in court that he operated a “Ponzi” scheme, making high-interest payments to early investors in the loan program with the money of later investors. Eventually, he fled the country with the bulk of the about $3 million invested, Assistant U.S. Atty. David A. Katz said.

‘Relying on Status’

Many of the investors knew Marlowe as a banking executive and investment counselor active in the First Baptist Church in Van Nuys and Faith Evangelical Church in Chatsworth, Katz said. Marlowe helped found First Citizen’s Bank of Sherman Oaks and the defunct Valley State Bank of Encino.

“He induced people who were senior citizens to invest their life savings . . . relying on his status in the San Fernando Valley religious community,” Katz said.

Marlowe, doing business as Monroe Marlowe Investments in Van Nuys, told investors that their money would be used to make high-interest, short-term loans to wealthy borrowers who had pledged their expensive homes in Malibu, Brentwood, Beverly Hills and Pacific Palisades as collateral, authorities said.

In fact, there were no borrowers or loans, Katz said.

As part of the plea agreement, the government will dismiss 18 other felony fraud counts contained in an indictment issued against Marlowe in April.

2 Other Schemes

The U.S. attorney’s office also has agreed not to prosecute Marlowe in connection with two other alleged phony investment schemes, known as Valley Commodities and Electricity Park, which involved windmills in the desert.

In return, Marlowe agreed to forfeit financial accounts and various properties, including interest in a Van Nuys tool company, stocks, a house in San Clemente, a car and fig properties in Northern California. These holdings, valued at about $550,000, will be used to repay victims, Katz said.

Katz said he asked that Marlowe’s sentencing be delayed to give the government time to substantiate that the properties are worth what Marlowe claims. Under the agreement, Marlowe’s family also has agreed to forfeit whatever assets it has that can be attributed to the loan scheme.

“He admits he made a mistake,” said Marlowe’s attorney, Stephen M. Hogg. “He wants to make amends.”

8 Elderly Couples

Katz said the 12 counts to which Marlowe pleaded guilty involve eight elderly couples who lost almost $170,000.

All 100 victims of the scheme will receive some repayment, Katz said.

“No one is going to get 100%,” he said. “But we’re trying to do the very best we can for the victims.”

At least six investors in the scheme were in court Monday to hear Marlowe’s guilty plea.

“We hope we get at least some money back,” said Dave Donovan of Simi Valley, who invested $20,000 in the loan scheme.