Financier Given 4-Year Term for Misusing Funds : Crime: Jack Miller, a former power in Democratic Party politics, was convicted of using the fees of condominium associations to further his own empire.

Jack E. Miller, a former power broker in local Democratic politics who operated the largest condominium-management firm in California, was sentenced Thursday to four years in prison for misappropriating more than $2 million from homeowners’ associations.

Superior Court Judge Luis A. Cardenas noted that the 55-year-old financier had built the American Dream, a hugely successful business, in the 1970s and early 1980s. But Miller should have known better, the judge said, than to use homeowner association money entrusted to him to expand his small empire.

“I just think there was this great caldron of money sitting in the bank, and, for whatever reason, you succumbed to the temptation to dip into those funds,” Cardenas told Miller.

Miller, former publisher of the weekly Westminster Journal and a former Westminster planning commissioner, was known for his influence with major financial backers in Democratic political races in west Orange County.

During three days of testimony, a rarity for a sentencing hearing, Deputy Dist. Atty. Guy N. Ormes offered substantial evidence that more than $1.8 million in homeowners’ funds is still missing. The total figure was reduced to under $2 million when Orange businessman Kent Rogers, who bought Miller’s firm in 1984, paid $380,000 into the homeowner association accounts.

Miller first turned down an offer from prosecutors that he plead guilty to grand theft charges in exchange for a three-year sentence. He finally pleaded guilty to nine counts of grand theft and one conspiracy count. But his attorney, Allan H. Stokke, said Miller was convinced that he deserved probation and preferred taking his chances with a judge rather than accept an agreement with prosecutors.

“He realized the risk,” Stokke said. “But he didn’t want a D.A. telling him what his sentence was going to be--he wanted it to come from a judge.”

Miller’s financial difficulties first gained public attention in November, 1983, with the disclosure that nine months earlier he had been kidnaped and ordered to pay $40,000 at gunpoint to a Mission Viejo businessman who claimed that Miller owed him nearly 10 times that much.

The kidnaping came the same year that Miller’s business--which represented nearly 20,000 homeowners through about 200 associations at its peak--began to crumble.

Prosecutor Ormes, with help from district attorney investigative auditor Charles A. Bell and Westminster Police Department Detective David Stronach, spent months piecing together what happened.

Ormes produced voluminous documents to show that Miller consistently delayed transfers of the homeowners’ monies he had collected to individual homeowner association accounts. Yet he kept records to make it appear that the transfers had been made.

Miller’s firm was attractive to homeowner associations, Ormes claimed, because of its low interest rates; but Miller could keep the rates low because he made a profit from the interest on the homeowner fees he kept in his own agency’s account.

Ormes claimed that Miller, whose wife and a daughter worked in the business, had devised a sophisticated method to keep anyone from finding out about the fund scheme. The family, thorough a bank officer, would keep track of which homeowner accounts were in danger of having checks bounce. They would then transfer to those accounts enough money to prevent any overdrafts. That way, no homeowner group was alerted to how little money its account contained.

The scheme fell apart when his firm didn’t have enough money to cover the accounts.

Judge Cardenas noted that “where all (the $1.8 million) has gone will forever remain a mystery.”

Miller’s wife and daughter have already pleaded guilty in the case and are on probation.

Ormes noted in his argument Miller’s own explanation, in a letter to the court, how business expansion plans led him to use the homeowners’ money. Miller wrote that he wanted “to move toward dominating the industry where we could not be challenged.”

In testimony at the sentencing hearing, Miller admitted commingling funds for short periods of time. However, he claimed that he had no idea how such large chunks of money wound up unaccounted for.

Cardenas told Miller that he found much of his testimony “inherently unbelievable.”

“Large chunks of money are missing and you have no idea what happened?” the judge asked, later adding: “I’m terribly disappointed in you.”

Santa Ana attorney Marshal B. Compton, representing nine of the homeowner associations, wrote to the court that some recovery has been made, primarily through insurance that the groups carried, but that the recovered funds amounted to an average of only 20 cents on the dollar.

“Not one penny has come from Mr. Miller,” Compton wrote the court.

Miller’s attorney, Stokke, whose witnesses took up most of the three-day hearing, told the judge that if he granted Miller probation, the former financier would spend 70% of his income on restitution to the homeowner groups.

Stokke also argued at length that Miller never used the money for his own personal pleasure, such as mansions or yachts.

“This was a business situation that went awry,” Stokke argued.

But the judge countered that while Miller may not be guilty of “conspicuous consumption,” he did have selfish reasons for diverting the funds. In remarks directed at Miller, the judge said: “I’m sure you believed that some day it would make you a wealthy man.”

Ormes did not make a specific recommendation for Miller’s sentence but asked for “a significant portion” of the maximum of nine years that Miller could have received.

Cardenas denied Miller’s request that he be allowed to remain free pending his appeal, or at least for two weeks until he could get his affairs in order. The judge ordered him taken into custody.