Firm Accused of Operating Ponzi Scheme : Westlake Village: A preliminary injunction halts new investments in Sevitski & Associates. A receiver has begun to sort out the books.

Sevitski & Associates told its investors, or backers, that “the best and most confident backers are informed backers.” But according to the California Department of Corporations, the oil and gas concern didn’t inform its backers about some important facts.

For starters, the Westlake Village firm and some related companies, ostensibly engaged in energy investments, actually ran a Ponzi scheme, the department contends.

In other words, the huge monthly checks that some investors got for a while--reflecting apparent returns of up to 100% a year--actually came straight from the money the investors themselves had put in, not from pumping and selling oil and gas from wells in Oklahoma and Kansas, the agency claims.

On Friday, the department was granted a Superior Court preliminary injunction against the firm and its owner, Joseph T. Sevitski, essentially putting a halt to new investments at the company and appointing a receiver for its assets.

The receiver’s job is to sort out Sevitski & Associates’ books and try to get the investors some of their money back.

On average, the known investors are said to have put nearly $30,000 each into the alleged scam, but some might have put up much more.

One Southern California couple, who asked not to be identified, said they invested $250,000--their rainy-day savings from selling a house.

“Your heart goes out to these people,” said Irving M. Einhorn, the newly appointed receiver.

Sevitski could not be reached for comment, and his attorney did not return phone calls seeking comment.

The alleged scheme worked like this, according to an examiner’s declaration filed in Superior Court by the department: Between January, 1989, and November, Sevitski & Associates raised $17.1 million from various sources, including $12.5 million from 425 investors. After sending the money to a variety of bank accounts in California and Oklahoma, about $3.96 million of it eventually was directly paid back to investors.

Investors had been told, of course, that their returns would come from the gross receipts from selling oil and gas, but a separate $1.05 million that was raised from such energy sales only paid overhead expenses and salaries for workers in Oklahoma, and never found its way to investors, the examiner’s declaration claims.

There were other alleged problems. At one point, Sevitski & Associates raised $1.11 million from investors, ostensibly to be invested in wells in one oil and gas project, even though the firm did not own the leases on those particular wells until after raising the money, the declaration claims.

Moreover, out of the $17.1 million, Sevitski paid himself $214,950--and paid $37,456 to buy new automobiles, $135,505 to lease automobiles and $228,156 to repay American Express credit-card bills, the declaration claims.

The Southern California woman, who with her husband invested $250,000, said, “We were promised 100% interest, which sounded too good to be true.”

It was, apparently, because the checks stopped after three months, she said.

The woman said she and her husband initially were impressed with Joseph Sevitski because he said he worked and invested with some of Sevitski’s family members.

“What man would screw his own family?” she recalled thinking.

Before taking their money out of a certificate of deposit and placing it with Sevitski & Associates last summer, the couple attended two meetings with about 50 other people, hosted by Joseph Sevitski.

“He’s like an evangelist, my husband says--he does not see anything negative,” the woman said.

In a court declaration, Dave Kingston--a Navy personnel assistant from Ventura County who said he invested $33,000 on the promise of a 34% return--said he got a letter from Sevitski in September explaining that Sevitski & Associates was going to become a public company and investors would be refunded their investments.

Later, another letter again offered a refund and explained that the state was investigating the firm, but Kingston said in the declaration he still hasn’t got his money back.