Selection of Jury Begins in Investor Fraud Case : Courts: East county businessman O. B. Phillips and an associate are accused of a real estate scheme. The prosecutor says losses may total $30 million and could involve 2,000 people.

Jury selection is under way in Ventura in the trial of two men charged with defrauding 21 real estate investors out of almost $3 million, one of the largest fraud cases in county history.

The prosecutor, who is scheduled to begin presenting her case this week, suggested that it may never be known how many investors lost money in the scheme.

“I think there may have been as many as 2,000 people who lost money,” Deputy Dist. Atty. Rebecca Riley said Friday. “There could be as much as $30 million that was lost.”

The two defendants are Olen Boyce Phillips, 52, who resided in Westlake, and Charles Francoeur, 35, of Agoura.

A third defendant, Felix Laumann, 57, of the Central California community of Cambria, is tentatively scheduled to stand trial this fall.

The three were indicted by a county grand jury in February, 1991.

Phillips, a commercial airline pilot, faces 81 counts of grand theft and securities fraud. The prosecutor is alleging that he bilked investors out of $2.9 million.

Francoeur, who was an executive in Phillips’ financial empire, faces 78 counts of grand theft and securities fraud stemming from allegations that he defrauded investors out of $2.6 million.

Separately, the FBI is investigating other financial activities of Phillips, sources said. Phillips was a stockholder and one of the directors of the now-defunct United Community Bank of Thousand Oaks, the parent company of Westlake Thrift & Loan of Westlake Village, which went out of business in 1988.

An FBI spokeswoman in Los Angeles on Friday declined to comment.

A common thread running through the alleged real estate fraud was an offer by Phillips’ companies to buy second or third trust deeds on commercial properties, “which were not recorded at all or were recorded a year later,” Riley said. This practice, she said, left investors in a vulnerable position.

Both Phillips and Francoeur, who are free on $150,000 bail each, were in court Friday during jury selection. Neither they nor their defense attorneys would comment on the allegations.

About 250 prospective jurors were questioned last week. They have been told that the criminal trial, presided over by Superior Court Judge Frederick A. Jones, could take up to three months to complete.

Riley said she plans to call about 60 witnesses. She expects defense attorneys to ask 40 or more witnesses to testify.

There are more than 500 pages of exhibits related to what the prosecution alleges was a massive fraud scheme perpetrated in both Ventura and Los Angeles counties.

At the center of the tangled case is Phillips, a friendly, soft-spoken man who rose to a position of financial and civic prominence in the Thousand Oaks and Westlake Village communities.

Known to his friends and associates as “O. B.,” Phillips is the son of a Texas sharecropper who built a multimillion-dollar real estate empire in Ventura and Los Angeles counties.

According to published accounts, court records and interviews with friends and associates, Phillips has been well-known in the area as a businessman and has been active in civic affairs for a long time. He settled in the Conejo Valley in 1966. He obtained a real estate license and worked for a broker while also working as a commercial pilot on standby schedules.

In 1969, he started his own business, Westoaks Realty, with another real estate agent. The business prospered and so did Phillips’ prominence in the Westlake Village area.

Phillips became known as a community activist who gave generously of his time and money to local charities. Friends and associates described him as a person who loved to be with his wife, who was his high school sweetheart, and his three children. They said he was something of a workaholic who also derived pleasure from flying, a skill he learned in the military.

By the late 1980s, Phillips had established a string of seven companies to oversee a wide range of real estate investments under a parent firm, Phillips Financial Group of Agoura Hills. By then, he also was a successful commercial jet pilot and viewed as a pillar of the community.

By 1990, however, complaints had surfaced from people who had invested with Phillips. They included retirees, airline pilots, doctors, schoolteachers and other professionals.

For example, a Los Angeles policeman, who is a father of five, said he lost $475,000 in real estate investments when be bought four trust deeds through Phillips in August, 1989. He said he was attracted to the investments by promises of high returns. Instead, he said, he lost money that had been earmarked to finance a new home.

According to the indictment, the policeman’s investment was used in a Ponzi scheme “to pay interest or principal to prior promissory note investors.” The indictment also says that “new promissory note funds were necessary to keep Phillips Financial Group solvent.”

Several investors said they talked with Phillips and that he promised to try to repay as many of them as possible.

The case took an unusual turn in November when the Ventura County Board of Supervisors agreed to pay $385,000 in accounting and investigative fees required to defend Phillips and Francoeur.

Earlier, a judge declared them indigent and granted them public lawyers because no private attorneys would take the complex case. The decision was made although both defendants held high-paying jobs and owned expensive homes.

Court officials told the supervisors that there was no choice, because denial of the funds would amount to denial of a fair trial.

Dist. Atty. Michael D. Bradbury argued--to no avail--that defendants with apparent assets should be forced to shoulder some of their court costs.

In a letter to the supervisors last November, Bradbury noted that Phillips “makes about $150,000 per year, lives in a home in Westlake valued at over $1 million, has a retirement account of over $335,000, has his own personal airplane and drives a Mercedes-Benz.”

Between Phillips’ personal estate and the millions of dollars in investors’ cash that he was handling, it was difficult if not impossible to determine his total wealth, prosecutor Riley said Friday.

“I don’t know if we’ve located all of his assets,” she said.