Sentence Upheld in Loan Scam

A 75-year-old former bank president and church leader must serve at least another year of a 20-year federal prison sentence for bilking elderly investors out of more than $1 million in a phony real estate loan scheme, a federal judge ruled Monday.

U.S. District Judge A. Andrew Hauk refused a motion to reduce the sentence imposed in April on longtime Van Nuys resident O. Monroe Marlowe. Hauk said he wants more of the victims’ money returned and wants to be sure that federal prosecutors have done everything possible to locate all of Marlowe’s assets.

“There is still some money missing, some the government can’t track down,” Hauk said. “And while they still can track it down to give back to the victims, I’m not going to put this man out on the street where he can do it again.”

The judge said perhaps another year in jail will persuade Marlowe to come up with any hidden assets he might have.

Marlowe pleaded guilty Feb. 1 to 12 counts of mail fraud. He admitted swindling about 100 elderly investors out of about $1.2 million by operating a “Ponzi” scheme--making high interest payments to early investors in the loan scheme with the money of more recent investors.

Repayment Ordered

Before sentencing, Marlowe repaid about $345,000 to victims. He was ordered to pay an additional $694,000 and to pay a $30,000 fine to the government.

But Assistant U.S. Atty. David A. Katz said Marlowe has returned only $6,100. Katz maintained that Marlowe fled the country in 1986 with most of the money.

“It makes no sense that this money went up in smoke,” Katz said.

Marlowe was arrested in July, 1987, in West Germany, ending a 10-month flight through seven nations.

His attorney, Stephen M. Hogg, denied that his client has hidden money. He said the prosecutors have done nothing to liquidate Marlowe’s assets. Hogg said Marlowe “left a paper trail a blind man could follow” when he went to Europe.

Hogg also asked leniency because of Marlowe’s advanced age.

Hauk noted that Marlowe was not sympathetic with the ages of his victims. “I will take his age into account a year from now,” he said.

Several of Marlowe’s victims were in the courtroom Monday. Five asked the judge not to reduce the sentence until they had been repaid.

“I’d known him for 40 years,” said Owen Gruber, 70, of Woodland Hills. “I trusted him.”

Gruber said he knew Marlowe as a banking executive and investment counselor active in the First Baptist Church of Van Nuys. Marlowe was a founder of Valley State Bank in Encino and First Citizens Bank of Sherman Oaks.