Wymer Bankruptcy Process Begins With Liquidation of 3 Companies : Finances: Assets of the firms won’t come close to covering millions of dollars in liabilities incurred by Torrance and other cities in the investment scandal.
The court-appointed receiver for indicted Irvine investment adviser Steven D. Wymer, charged with defrauding Torrance and other cities of millions of dollars, has begun liquidation proceedings against three Wymer companies in federal bankruptcy court.
The Chapter 7 petitions, filed late last week, cite millions of dollars in liabilities--funds that a variety of clients, including Torrance, say Wymer squandered instead of investing for them. In all, 10 California cities and the state of Iowa claim that Wymer owes them a total of $113 million.
Attorneys representing Torrance say the liquidation proceedings could help in their search for the missing $6.2 million that the city entrusted to Wymer. They said Torrance will apply as a creditor in the proceedings.
But an attorney for receiver Robert E. Carlson cautions that the entire assets of the three Wymer firms would not make up what Torrance lost.
“The real question is, ‘What happened to Torrance’s money?’ ” said the attorney, Michael Glazer. “And it’s clearly not in the (Wymer’s) corporation. The corporation has only a couple of hundred thousand dollars.”
Assets of the firms, Institutional Treasury Management, Denman & Co. and Fund Administration Services, all of Irvine, include $367,000 in Institutional Treasury’s bank account, $35,000 in Fund Administration’s accounts, and nothing in the Denman & Co. account, Glazer said. The companies also have office equipment and furnishings--”some conference tables and computers”--that will bring something in a liquidation sale, Glazer said.
“Wherever the money went,” Glazer said, “it didn’t go into currently ascertainable bank accounts.”
But the liquidation filings will make the bankruptcy court “a central forum” to decide what to do with whatever money is recovered, Glazer added.
In the wake of last week’s filings, a bankruptcy trustee will be conducting “an aggressive audit,” added George Hedges, a lawyer representing Torrance. “We believe that will be very much (to) the benefit of creditors, including the city.”
Hedges said he hopes that the audit will include tracing clients’ funds that remain missing. The trustees’ research would assist with the city’s own search for its money, he said.
“This will be an important adjunct for us,” Hedges said.
Ronald L. Durkin, a former FBI agent, has been appointed bankruptcy trustee in the matter, according to the U.S. trustee’s office in Santa Ana. Durkin was appointed bankruptcy examiner in the case of FundAmerica, an Irvine-based marketing company that filed for bankruptcy in 1990 and later resumed operations.
Wymer, 43, who was indicted in December on 30 federal felony charges of money laundering, mail fraud, securities fraud and obstruction of justice, has pleaded not guilty. His attorneys have said that Wymer may have lost the funds through bad investments but did not steal the money.
Assistant U.S. Atty. Jean Kawahara said Monday that the bankruptcies should not have any bearing on the criminal case against Wymer. Wymer is free on $650,000 bond while awaiting trial and, Kawahara said, is generally restricted to his Newport Beach neighborhood.
The U.S. attorney’s office has seized many of Wymer’s personal assets, including homes in Manhattan, Idaho and Newport Beach, 13 classic and luxury cars, and four boats. The property is being held by the government pending outcome of the trial, Kawahara said.
