2 Indicted in Alleged Investment Fraud Scheme

A federal grand jury in Los Angeles has indicted a stockbroker and an investment manager on charges of bilking $13 million from unwary investors, including a group of nuns in South Dakota and retired postal workers in Missouri.

The indictment, unsealed Thursday, accused Daniel Burkhart of Camarillo and Gina Loren of Stateline, Nev., of conspiracy, securities fraud, bank fraud and wire fraud. If convicted, they face a maximum sentence of 150 years in prison and $7.5 million in fines.

Federal prosecutors said the scheme began in late 1985, when Burkhart worked at the stock brokerage of Bateman Eichler, Hill Richards Inc. and Loren was the investment manager for a company called London Atlantic Trust.

Loren, according to the indictment, solicited funds from investors throughout the country. The investors believed that they were going to get a high return for their money. The investors also were told that their funds would be secured by U.S. Treasury securities so that if London Atlantic defaulted, the securities would enable the investors to recover their money.

Instead, the indictment charged, Loren and Burkhart put the securities in an account at Bateman Eichler that was used as security for money they borrowed from the account.

Among the alleged victims were the Aberdeen Presentation Sisters of Aberdeen, S.D., who lost $700,000, and the Uniformed Services Benefit Assn. of Kansas City, a group of retired postal workers who lost $600,000.

Loren purchased a $1.6-million house in Orange and several expensive cars with money she obtained through the scheme, said James Bertero, a Los Angeles lawyer who represents the Aberdeen Sisters.

Neither Loren nor Burkhart could be reached for comment.

Loren was arrested in Reno on Wednesday, according to federal authorities, who said they expected Burkhart to turn himself in to the FBI.

Assistant U.S. Atty. James R. Asperger, who is prosecuting the case, said the charges grew out of a lengthy FBI investigation with the cooperation of Bateman Eichler.

As part of the scheme, prosecutors said, the suspects enlisted the services of a Kansas company that would telephone potential investors and ask them to invest in London Atlantic Trust.

Sister Stephen Davis, financial coordinator for the Aberdeen Sisters, said the order of nuns invested $700,000 in the scheme.

Bertero said that as a result of a federal court civil suit filed by the nuns, the Aberdeen Sisters had recovered about $573,000 of their investment and that he hoped for a full recovery over time. He said that the nuns sued Bateman Eichler and that the case had been settled out of court.

Bateman Eichler, in turn, sued Loren and Burkhart and agreed to compensate the victims for their losses from money the firm recovered.