Torrance Asks to Join SEC’s Lawsuit Against Wymer

The city of Torrance, in search of $6.2 million missing in an investment scandal, is attempting to join a federal government civil suit against Irvine-based investment adviser Steven D. Wymer.

The city filed a motion Friday in U.S. District Court, asking to be included in the lawsuit filed in December by the Securities and Exchange Commission.

The city will file its own suit to try to get back the $6.2 million entrusted to Wymer if the request to join the SEC suit is rejected, Torrance City Atty. Kenneth Nelson said Friday. But if the effort succeeds, the city will gain access to documents that could help show what happened to the missing money, Nelson said.

“We have the right to file a (separate) lawsuit. This just seems more efficient, to have everything heard in one place,” Nelson said of the city’s efforts to enter the SEC case.

But Mark S. Roberts, an attorney representing Wymer, said he is unsure whether the city can join the SEC suit because Wymer has agreed to settle it. However, it has not been determined whether Wymer will be assessed penalties or have to personally repay any money, he said. On Friday, Roberts had not yet been able to review Torrance’s motion.

Lori A. Richards, assistant administrator for enforcement with the SEC in Los Angeles, could not be reached for comment Friday afternoon.

Torrance officials learned of the missing $6.2 million in December, when a federal judge froze the assets of Wymer’s Irvine-based firm, Institutional Treasury Management Inc. Ten California cities are missing millions of dollars in the case, and two--Loma Linda and La Quinta--filed lawsuits against Wymer last month.

The Torrance City Council has approved spending up to $300,000 for lawyers and a private investigator in hopes of recovering some or all of the money, but the city’s efforts have been stymied because it cannot get access to some documents, Nelson said.

“We’re at a point right now where we can’t go any further in our own investigation,” he said.

The city’s motion to join the SEC suit offers some glimpses of what the city’s investigation has gleaned so far. Most of Wymer’s clients received their money back in mid-December, but only $93 was found in Torrance’s account on Dec. 11, when his client accounts were frozen.

According to the city’s motion, Torrance funds entrusted to Wymer were first deposited at Refco Capital, a New York City broker-dealer, with $3 million deposited in July, 1989, and $2 million in January, 1990.

Without the city’s knowledge, the money was transferred weeks later from Refco to an unknown account at First Interstate in Denver, the motion states.

The city suspects that Torrance’s funds may have been mixed in the Denver account with funds belonging to other Wymer clients, the motion says.

” . . . Defendants may have used the account at First Interstate Bank of Denver as a giant ‘melting pot’ for some or all of their clients’ funds, and Torrance’s money apparently found its way into this pot,” the motion said.

Nelson said Friday that one reason the city is trying to enter the SEC case is to make sure the clients’ money was divided equitably. But he emphasized that the city does not have proof that the division was unfair.

“This is a maybe, and we don’t want to accuse anyone until we’re more sure,” he said.