Attorneys Weigh Criminal Probe of Irvine Firms
A criminal investigation of Newport Beach investment adviser Steven D. Wymer appeared to be developing Monday as Iowa Gov. Terry Branstad announced that Iowa’s top federal prosecutors are headed to Los Angeles to share information on an alleged multimillion-dollar fraud.
Iowa’s two U.S. attorneys are expected to meet with their counterpart in Los Angeles on Thursday “to share information, and if there are grounds for criminal action, they want to be well-coordinated in that,” Branstad press secretary Richard Vohs said.
In a civil suit filed last week, the Securities and Exchange Commission charged Wymer with fraud in connection with the alleged disappearance of at least $75.4 million in investors’ money from Wymer’s Irvine-based companies, Institutional Treasury Management and Denman & Co. SEC officials have said the sum could be much higher.
Wymer’s clients included city and county governments, banks, thrifts and pension funds in 13 states and Micronesia, officials said. But most of the investors for whom he traded Treasury bonds and other government securities were counties and small cities in Iowa, which has been so rattled by the scandal that the governor appointed a special commission Monday to review all of the state’s public finances, Vohs said.
Assistant U.S. Atty. James R. Asperger in Los Angeles would neither confirm nor deny the existence of a criminal investigation of Wymer.
“I can’t even confirm or deny they’re going to be here,” Asperger added.
The SEC has not alleged that Wymer looted his clients’ money. However, in obtaining a federal court order last week freezing an estimated $1.2 billion in assets managed by Wymer’s companies, the agency cited “commingling of funds,” the danger that assets could be transferred, and the fact that Wymer cited 5th Amendment protections and refused to answer SEC questions about what had happened to the allegedly missing money.
Investigators said Saturday that they had traced $65 million of investors’ money to a New York brokerage. They did not return telephone calls Monday to discuss their progress.
Wymer, who left Colorado around 1980 with at least $28,000 in debtor judgments against him, now owns homes in Newport Beach and Point Manalapan, Fla., two boats and two Mercedes-Benzes, property records show.
Until two weeks ago, he also owned a 1972 Cessna Citation jet worth an estimated $560,000, according to Federal Aviation Administration records and aircraft dealers.
Wymer sold the Cessna to Los Angeles Aircraft Exchange Inc. in Costa Mesa for an undisclosed amount on Dec. 4, FAA records show. That is after SEC officials began questioning Wymer about irregularities in accounts that he managed, but before the SEC obtained the freeze on his personal and corporate assets last Wednesday.
Wymer is “somewhere in California” said his attorney, Michael Perlis, who refused to comment on the allegations against his client.
“I don’t think that would be appropriate as it appears they are passing their information on to criminal authorities on the prosecuting side,” Perlis said. “I don’t know if that’s true or not, but that’s what I read.”
The court-appointed receiver, Los Angeles attorney Robert Carlson, said Saturday that $65 million in Iowa investors’ accounts had been traced through several banks to discretionary accounts controlled by Wymer at Shearson Lehman Bros. in New York.
“Mr. Wymer’s business was such that he would normally transfer money every day, nor is there any indication or allegation based on this that Mr. Wymer pocketed the money,” Perlis said.