Man Accused of Swindling 21 Investors Goes on Trial : Courts: Olen B. Phillips betrayed people who entrusted him with their nest eggs, the prosecutor tells the jury.

The trial of Olen B. Phillips, an airline captain accused of masterminding one of the biggest frauds in Ventura County history, began Wednesday with a prosecutor accusing him of defrauding many investors out of their life savings or retirement nest eggs.

“This is basically about the betrayal of trust,” Deputy Dist. Atty. Rebecca Riley told the jury.

In her opening statement, Riley dissected for jurors a thick indictment that describes how 21 investors lost almost $3 million through Phillips’ Agoura Hills-based real estate investment network.

“It’s really not a complex case,” she said, attempting to reassure jurors who must grapple with a daunting 81-count indictment turning on the fine points of real estate trust deeds and partnerships.

Investigators believe that besides the 21 investors who may testify in the case, hundreds of others who may never get their day in court lost millions of dollars more in tainted deals in Ventura and Los Angeles counties.

Particularly hurt were individuals who put their life savings and retirement income in jeopardy, Riley said in her opening remarks in the courtroom of Superior Court Judge Frederick A. Jones.

Riley recited what has become a familiar theme in Southern California get-rich-quick schemes: a company exuding glitz but having little substance.

“The image of success was really a facade,” she said.

The other half of the equation also had a familiar ring: people investing their life’s earnings in the company without investigating how their cash was being handled.

If they had, she said, they would have found out that many of the trust deeds were never recorded and were, in effect, worthless.

Charles Francoeur, 35, of Agoura, described by Riley as Phillips’ vice president, is a co-defendant in the trial.

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 last year on charges of grand theft, securities fraud and conspiracy to commit fraud. The alleged crimes occurred between January, 1988, and January, 1990.

Phillips, 52, who has moved from his Westlake home, still lives in Ventura County, authorities said.

A United Airlines pilot who built a reputation as a solid citizen in the Conejo Valley, he sat stoically through the opening statement with his attorney, Steven D. Powell. Francoeur sat next to them, along with his attorney, William C. Maxwell.

If convicted, both could face 10 years in prison. They are free on $150,000 bail each.

The defense attorneys have decided not to make opening statements on behalf of their clients, who pleaded not guilty to all of the charges. They said they will wait until the prosecution has laid out its case before telling jurors why their clients are innocent.

During a recess, Phillips, known to his friends as “O. B.,” told a reporter that “there’s a lot I want to say, but I’ve been cautioned not to.”

Phillips said he would be on vacation from United until the trial’s conclusion.

He said that since the indictment, his family--his wife, Caroline, and their three children--has held together.

The waiting, though, has been “a killer,” he said, adding that he was ready to go to trial.

In her opening statement, Riley said Phillips and a partner developed a real estate investment network in the mid-1980s.

When the company dissolved in 1986, Phillips formed Phillips Financial Group of Agoura Hills, of which he was president. It spawned a number of real estate investment companies.

Francoeur, who “very nearly worshiped Mr. Phillips,” became the firm’s vice president, she said.

Together, the prosecutor alleged, they marketed trust deeds and shares in limited partnerships on undeveloped land, commercial and residential property designed to keep Phillips’ empire afloat rather than legitimately return income to investors.

“They lied to people and got their money . . . and then used that money for their purposes,” Riley said.

For example, she said, investors who thought that they were earning double-digit interest on trust deeds learned to their dismay that dozens of other investors were holding trust deeds on the same real estate. This meant that if the property went into foreclosure, the investors would be out in the cold.

“Some of these properties had over 200 trust deeds placed against them,” Riley said. “Had they been told the truth, they (the investors) would not have given them their money.”

Worse, Riley told the jury, investors did not know that their cash was being used in a Ponzi scheme “to fund a negative cash flow--or to pay interest to other investors.”

Riley read off a list of people who allegedly lost thousands in investment income to the defendants.

Included was a college student who lost $70,000 he received from an insurance settlement; a schoolteacher who lost $13,200 he was investing to support his mother and two sisters, all of whom were disabled; a firefighter who lost $325,000 in retirement income; a retired Los Angeles police officer who lost $475,000; and a Texas pension fund that lost $900,000.

One investor, H. Ray Lahr, 67, of Malibu, watched the opening proceedings and later said he plans to attend every day.

Lahr, a retired United Airlines captain, said in an interview that Phillips enticed him and a dozen or so other United pilots to put up real estate investment cash.

In the end, Lahr said, he lost $400,000 he was investing for himself, his mother-in-law and an uncle.

“He’s a very personable, soft-spoken country boy,” Lahr said of Phillips. “He engenders a lot of trust.”

Lahr recalled almost doubling his outlay initially on an investment in a condominium project in Thousand Oaks.

“That was the worst thing that could have happened,” he said, because then he began putting more money into Phillips’ deals. Then came the collapse of Phillips’ network--and the indictment.

He said investors have not yet filed civil litigation seeking assets that might be remaining from Phillips’ operations, which have been tied up in receivership, until they see how the criminal trial comes out.

As for Phillips, Lahr said, they exchanged greetings Wednesday morning before the trial began.

“I find it tough to be rude to anybody,” he said.

Still, he said, “people lost their health over this. People were wiped out. Untold numbers of people were devastated and ruined by this thing.

“I’m not vindictive. I just want to see justice prevail.”