Newport Beach investment adviser Steven D. Wymer was indicted Thursday on 30 counts of securities fraud, mail fraud, money laundering, obstruction of justice and other federal charges stemming from the alleged loss of more than $100 million of his clients' money.
Wymer's attorney, Paul N. Murphy, said he assumed that the 43-year-old money manager will plead not guilty to all charges at his arraignment Monday.
If convicted on all counts, Wymer could be sentenced to up to 275 years in prison and more than $140 million in fines, Assistant U.S. Atty. Jean A. Kawahara said.
The indictment does not allege that Wymer misappropriated the money for his personal use. Nor does it specify what became of funds entrusted to him by dozens of cities, counties and other small public entities in Iowa, Colorado and California to be invested in U.S. government securities.
Wymer's attorneys have said that Wymer lost the money through risky securities trading methods. Prosecutors say Securities and Exchange Commission investigators still have not accounted for all of the $100 million. But whether it turns out to be lost or stolen, prosecutors said, Wymer is guilty of fraud, money laundering and lying to clients and the SEC.
"Whether he bought Porsches or Ferraris or fancy houses or whatever, or lost the money trading, he still was making misrepresentations to clients," Assistant U.S. Atty. James R. Asperger said. "And if those misrepresentations can be proven, the fraud scheme can be proven."
Wymer has also been charged with securities fraud in a separate civil suit filed by the SEC.
According to the criminal indictment, handed up by a Los Angeles grand jury Thursday, Wymer lulled and deceived clients of his two Irvine companies, Institutional Treasury Management and Denman & Co., into believing that their cash and securities were safe at third-party banks and brokerages earning a high rate of return.
But the indictment alleges that Wymer sent clients false monthly statements that overstated the amount of money in their accounts, had employees forge bogus brokerage confirmation documents to back up the fake monthly performance statements and stopped Refco Securities, a New York brokerage, from sending clients true statements. Refco is not charged with wrongdoing.
About $100 million that clients believed they had in their accounts was missing before mid-October, when the SEC began asking questions about irregularities in accounts Wymer maintained for Marshalltown, Iowa, prosecutors said.
Once the SEC contacted him, Wymer engaged in a cover-up, shifting millions of dollars in a series of sophisticated transactions designed to mask the fraudulent activity and later to obstruct the SEC investigation, the indictment alleges.
Among Wymer's alleged victims were the city of Orange, which appears to have lost $7.15 million, and Torrance, which was told by Wymer that it had $6.2 million in a Refco account when, in fact, its balance stood at $93, according to court documents. Altogether, 10 California cities and one California utility appear to have lost about $45 million in funds.
Wymer has been held without bail at the Metropolitan Detention Center in Los Angeles since his arrest Dec. 17.