Wymer-Controlled Investments May Be Unfrozen : Inquiry: Many of the accounts appear to be intact. Most of the $1.2 billion could be freed as early as Friday.
Most of the $1.2 billion in investments controlled by Newport Beach money manager Steven D. Wymer could be unfrozen as early as Friday, officials said Wednesday.
Los Angeles attorney Robert Carlson, the receiver appointed by a federal court to examine Wymer’s troubled financial empire, said that after preliminary investigations, it appears that accounts of 40 or more of Wymer’s 61 clients are intact.
Carlson said he expects to recommend that U.S. District Judge Richard A. Gadbois Jr. lift the freeze on “a very substantial amount” of the $1.2 billion in frozen assets at a hearing scheduled for Friday. If the judge accepts the recommendation, roughly $800 million to $960 million could be released, Carlson said.
It was the first good news for investors since Dec. 11, when the Securities and Exchange Commission charged Wymer with civil securities fraud and Gadbois froze all of the assets of his two firms, Institutional Treasury Management and Denman & Co.
Many of Wymer’s clients were cities and counties in Iowa and California who thought their money was secure because Wymer traded only in Treasury bills and other government securities. In Iowa, at least one government entity had to borrow money from the state because it couldn’t meet its payroll with its assets frozen.
Federal prosecutors, who ordered Wymer’s arrest Tuesday on criminal fraud charges, said about $95 million in clients’ money remains unaccounted for.
Carlson said Wednesday that at least $65 million removed from an Iowa Trust account has now been traced. Investigators, however, are not certain of the status of the other $30 million.
“We have no idea where that ($30 million) is right now, and if it was real or fictitious,” Carlson said.
Much of the money alleged to be missing was in custodial accounts at Refco Securities, a New York brokerage, Carlson said. But Wymer is accused of telling several cities, including Orange and Torrance, that they had millions in the Refco accounts when, in fact, the money wasn’t there, according to the criminal complaint.
At least eight SEC investigators are holed up in Wymer’s Irvine offices poring over financial records, Carlson said, adding that they have not yet been able to verify the status of about $20 million to $30 million believed to be in those Refco accounts.
In addition, authorities cite the possibility that Refco documents provided to clients may have been forged. A statement that the city of Orange received from Refco in June said the city’s account contained $7.1 million, when in fact it had $4,000, the criminal complaint alleges. Refco President Sandy Maggio on Tuesday said the document was “phony.” But it was signed by a Refco employee, and Carlson said Orange officials told him that they recognized the employee’s signature from previous transactions.
“There is a serious, serious question here as to whether this was a forged document or not, and whether it was a real signature or not,” Carlson said.