Investor Testifies Ojai Minister Stole His $116,000 : Courts: Prosecutors say Robert J. Brancato used $1.66 million in clients’ money for personal expenses and to operate National Preferred Business Services.

An investor testified Monday that an Ojai minister swindled him out of at least $116,000 in a scheme that authorities say netted more than $1.6 million in illegal proceeds.

Robert J. Brancato, 55, a minister at the Church of Christ in Ojai, is on trial in Ventura County Superior Court on 24 counts of theft by fraud and three counts of tax evasion in connection with a company he ran from 1984 to 1988 called National Preferred Business Services.

Michael Harris of North Hollywood testified Monday that he got back less than $14,000 of the $130,000 to $135,000 that he invested in a five-year “debt-security” plan through Brancato’s company for himself, his wife and his sister-in-law.

Harris testified that after reviewing bank records he learned that Brancato spent some of the money to buy meals and repay American Express bills.

“I was agitated because I had not received a return on my investment,” Harris testified. “This was after filing an income tax return and withdrawing my IRA. We transferred our money, rolled it over to National Preferred Business Services, and we had to pay a penalty for early withdrawal.”

Brancato responded to his complaint by giving him a check for $5,000 to cover the penalty and “to make me happy,” Harris said.

Harris testified that Brancato later gave him a check for $8,840 for his sister-in-law. Harris said he believed that the money was an investment return. That check, drawn on a Wells Fargo Bank account, bounced, he testified.

Brancato wrote a second check that was good, but Harris said he later learned that the money was drawn directly from an investment account that his parents had just started with Brancato. When asked about the investments, Brancato indicated that it was tied up in a housing development called Leisure Hills, Harris said.

Harris testified that he realized he was the victim of fraud in 1988 when Brancato said he could not pay him interest on his sister-in-law’s account because “the computers were all tied up. He couldn’t even come up with a statement because the computers were down.”

Frances Dykstra, Brancato’s secretary, testified that she was told never to open bank statements but to pass them on to Brancato or his wife, Dreema Brancato. All the bankbooks and account ledgers remained locked in a cabinet controlled by the Brancatos, Dykstra said.

Dykstra testified that she often found checks from investors who had no contracts with Brancato and sometimes found contracts for investors but no checks from them.

As soon as an investor’s check came in, Dreema Brancato would send the money out by writing checks to creditors and other investors, Dykstra said.

At one point, Wells Fargo Bank closed the Brancatos’ business accounts, and they began operating strictly with cash, Dykstra said.

“I had trouble getting my paychecks,” Dykstra testified. “I had two paychecks in a row that bounced.” Finally, the Brancatos paid her in cash, Dykstra testified.

Prosecutors said Brancato, who is free on his own recognizance, promised investors that their money would go toward projects to help reduce unemployment and mortgage rates and benefit military veterans. But Brancato actually used $1.66 million of the money for personal expenses and for operation of National Preferred Business Services, they said.

Deputy Dist. Atty. John L. Geb said Brancato spent about half the money “for personal living. He had kind of an extended family.” Some of the money went for the purchase of horses, Geb said.

Dreema Brancato has not been charged because “what she did was at the direction of Robert Brancato,” Geb said.