Early Signs of Excess : Ex-Partner Says She Left After Wymer’s Spending Sprees
The phone call jolted Janet Bainbridge from her sleep. Had she heard that her former business partner, investment adviser Steven David Wymer, was accused of making $113 million in taxpayer money disappear?
“My first thought was: I bet he was playing the futures market uncovered, and lost it there,” Bainbridge said.
Her shock was tempered by a sickening sense of deja vu . In 1985, she said, she discovered that Wymer had lost $200,000 in company funds in speculative futures trading. He had used an additional $250,000 to buy a BMW, two Manhattan condominiums and other luxuries, she said. Their fledgling investment firm, J. A. Denman & Co., folded.
Client funds were not affected, and Bainbridge never took legal action against Wymer. None of the investors who over the next four years entrusted Wymer with $1.2 billion--much of it in public funds--ever contacted her.
In fact, Wymer was so likable, came so highly recommended and was earning such high yields that cities, banks, thrifts, pension funds and investment trusts in 13 states handed him millions without checking his background.
If they had, they might have learned that the 43-year-old investment adviser--who in 1991 was named by a leading investment directory as one of “The 100 Best Money Managers You Can Hire”--had extravagant tastes, an embellished resume and a pockmarked career. Wymer’s storied past included two failed businesses, a property foreclosure and several lawsuits filed by creditors, according to court records and former associates.
Now Wymer faces 30 federal charges of securities fraud, money laundering, obstruction of justice and lying to the Securities and Exchange Commission. He denies the charges.
Wymer cited the Fifth Amendment when questioned by the SEC. He has declined to be interviewed. His lawyers, citing the indictment, say he cannot respond to the specific allegations against him but that he denies any wrongdoing.
Prosecutors say he either lost or stole $113 million belonging to dozens of cities and public agencies, then played a giant shell game to try to mask the losses. SEC officials in Los Angeles say the Wymer case is one of the largest investor swindles they’ve seen.
Ten California cities are out $45 million, and prospects for recovering the money are dim. Governments or organizations in Iowa, Colorado and other states have also suffered large losses.
The SEC has shut down Wymer’s two Irvine companies, Institutional Treasury Management Inc. and Denman & Co. But authorities have yet to trace where the missing $113 million went. Prosecutors say that’s because Wymer, who is free on $650,000 bail, has hidden or destroyed the telltale documents.
Wymer’s lawyers will say only that “so-called missing” money was lost in bad investments, not stolen. But federal officials and sources at the brokerage firms where Wymer traded say they have no evidence of massive trading losses.
Like the fate of the missing millions, Wymer’s career and character remain clouded by contradictions, mysteries and lies.
Six-foot-two with blond good looks, Wymer is described by acquaintances as having a low-key charm and a striking talent for making everybody like him.
Wymer was born and raised in a middle-class neighborhood in Fullerton, but his parents divorced, and money seemed tight. A school chum, David Severson, recalled Wymer’s mother driving him to Fullerton High in an old Rambler.
“Most guys would have died,” Severson said. “Steven, it didn’t bother him. He didn’t have that kind of vanity.”
Perhaps. Yet when federal postal inspectors began seizing Wymer’s personal assets last month as allegedly ill-gotten gains, they discovered that Wymer and his 29-year-old second wife, Ann Marie, owned 13 cars, including three BMWs, two Mercedes Benzes, a Porsche and a 1991 Ferrari.
At Fullerton High, Wymer worked on the school newspaper, swam and ran cross-country.
“He wasn’t pretentious, he was very intellectual and he was genuine,” Severson said. “He was one of the only people I really admired.”
Wymer earned a bachelor’s degree in math from UC Irvine in 1969 and worked briefly for Rockwell International in Anaheim. He would later say he was a senior engineer at Rockwell, but company records show that he worked only part-time as a data entry clerk, then briefly as an entry-level engineer.
Wymer left Rockwell, saying he intended to return to school, and moved to Boulder, Colo.
In Boulder, Wymer launched a construction company and was part owner of a dance studio. Creditors sued both ventures. In 1978, he lost a piece of property worth $25,000 in a foreclosure, and in 1979 a lumber company sued him for a $15,000 debt, court records show.
In 1980, Wymer moved to Newport Beach, where he was arrested on drug possession charges. The case was dismissed.
Wymer’s attorney, Mark S. Roberts, declined to comment on the drug arrest or the allegations of past financial misconduct.
“There’s an attempt to smear the guy,” he said.
In early 1980, Wymer landed his first in a series of jobs trading commodities and futures. “He was one of the top producers for me, a very, very good commission broker,” recalled Ronald H. Olsen, a former boss.
Wymer met Bainbridge at the Del Mar racetrack. She had given up a career as an astrophysicist to raise three children. Recently widowed, the British native was selling real estate.
“He was a delightful person to talk to,” she said. ‘We talked endlessly.” He was also magnetic. “When he walked into a room, there was a huge presence there.”
In 1983, Wymer and Bainbridge formed their own investment firm, giving it her maiden name of Denman. When it began to prosper, he surprised her with two new Porsches, a cream one for her, a silver one for himself.
“He liked to spend money,” Bainbridge said. “He liked huge gestures.”
Business went well, Bainbridge said, until Wymer began to have unexplained absences. “He became very inaccessible toward me, and secretive,” she said.
She told Wymer that she wanted to terminate the partnership in a year. But in late 1985, she said, a company check bounced, and she traced the $450,000 to trading losses, cars and condos.
“As I looked over the records, he went from behaving perfectly to a six-month spree of tearing all over the world spending money,” Bainbridge said. “He used (the company) as his personal checkbook.”
They shut down the company, and Bainbridge said she has not spoken to Wymer since.
In 1986, Wymer launched a new firm, Denman & Co. of Irvine, which invested in U.S. government securities for public agencies and institutional investors. The portfolio he managed swelled to $300 million by 1988 and $1.2 billion by October, 1991, SEC records show.
One of Denman’s first clients was Harold E. Brewer, then treasurer and finance director of Riverside. The 26-year veteran, who managed his city’s $220-million portfolio, was active in local treasurers’ associations and respected by his peers.
First, Brewer invested city funds with Wymer. Pleased with the results, he referred the young man to other treasurers. In December, 1987, Brewer retired and went to work for Wymer as a salesman.
Gloria Curry, city manager of Del Mar, said Brewer introduced her to Wymer in 1987. “It was obvious to me that Hal Brewer thought an awful lot of him and his expertise,” she said.
Del Mar, no longer a Wymer client, did not lose any money. Brewer has not responded to requests for comment.
Kirby Warner, who had worked for Brewer in Riverside and later became treasurer of Palm Desert, said Brewer introduced him to Wymer in September, 1987. He invested $4.5 million and said Wymer earned 1 to 2.5 percentage points more than what the city’s other Treasury investments were yielding. In December, 1988, Warner too quit to became a salesman for Wymer.
“I feel betrayed,” Warner said. “What better way to get investments and have an in in California government agencies than to use people who were in the governmental sector and knew everybody?”
Wymer’s wealth was mushrooming, but he never flaunted it. He dressed with understated elegance and was not known to hobnob with the Newport Beach high society set.
Yet in private, Wymer’s lifestyle was extravagant even by Gold Coast standards. According to court documents and public records, in addition to their 13 cars, the Wymers owned four boats and a million-dollar home with tennis courts in Newport Beach.
They paid $186,000 to furnish a $2.8-million house near Sun Valley, Ida., with antiques and furniture custom-made by Ralph Lauren. They also owned a Manhattan condo and property in Palm Beach County, Fla., worth more than $2 million.
After Wymer learned that he was under investigation, he began transferring millions of dollars in assets to his wife’s name, prosecutors say.
A few of Wymer’s investors became suspicious before the criminal allegations against him surfaced. Wymer’s typical commission was 30% of a client’s profits in fees.
The treasurer of Colton, Michael Williams, said he asked Wymer to produce trading documents to show that the city was getting its 70%. When Wymer did not, Williams fired him.
The government says Wymer’s alleged fraud began as early as 1986. By 1988, he had allegedly commingled funds from a number of clients in an account he controlled at Refco Securities, a New York brokerage. Most of the money that vanished appears to be from clients who had--or thought they had--accounts at Refco.
Clients believed that their money was turning a tidy profit, because Wymer allegedly mailed them fake statements, sometimes on Refco letterhead. In some cases, prosecutors say, he reported profits from trades that never took place or netted losses.
Wymer then claimed a percentage of the nonexistent profits as fees, prosecutors say. By 1991, two-thirds of Wymer’s 105 clients had received such fraudulent confirmation, the government says.
The SEC last week settled a civil suit against Wymer, and is now concentrating on recovering client money. The cities, meanwhile, are hiring attorneys and licking their wounds.
Ken Adams, the retired treasurer of Indio, said he used to send folders on job applicants to the city police chief for a background check. Yet when Indio’s auditor recommended Wymer, Adams invested $4.3 million.
“Let’s face it, I was too busy just trying to keep my head above water to do an awful lot of research on everything that came along,” Adams said.
“If I have to feel snookered, I feel like I’m in fairly good company.”
Times researcher Ann Rover in Denver contributed to this report.
Untangling the Web STEVEN DAVID WYMER
Born: March 6, 1948, Fullerton.
Education: Graduated Fullerton High, 1965. Obtained his Bachelor of Arts in mathematics in 1968 from UC Irvine.
Family: One daughter, Megan, from his first marriage; second wife, Ann Marie.
The set-up: Touting its ability to produce double-digit returns by investing in high-yield treasury securities, Wymer’s firm, Institutional Treasury Management Inc., persuaded recession-weary cities to use his services to counter falling interest rates. He used political allies for introductions to municipalities.
The allies: Harold Brewer, finance director for Riverside; Kirby Warner, former assistant city manager and treasurer of Palm Desert, and Joseph Welsh, president of the Iowa state Senate.
The method: Instead of charging the customary commission, Wymer’s contract with cities called for his firm to get 30% of the net trading gains, and the cities to get 70%. To keep managers off his scent, he allegedly mailed fake statements of their accounts.
The casualties: State of Iowa, $65 million; Palm Desert, $12.2 million; City of Orange, $7 million; Torrance, $6.1 million; Indio, Calif., $4.2 million; Sanger, Calif., $2.7 million; Loma Linda, Calif., $2.6 million; Big Bear Lake, Calif., $2.5 million; La Quinta, Calif., $1.6 million; Grand Terrace, Calif., $700,000; Beaumont, Calif., $500,000.
Other states affected: Colorado, Nevada, Minnesota, Utah, Texas, Illinois, New Mexico, Wyoming, Oklahoma, Virginia, Florida.
Other countries affected: Micronesia
Source: U.S. Postal Inspection Service
Researched by DALLAS M. JACKSON / Los Angeles Times
