Defendant Says He Intends to Repay Creditors : Crime: Olen B. Phillips testifies at his trial. He is charged with bilking 21 investors out of nearly $3 million.

A Thousand Oaks man accused of perpetrating the biggest fraud in Ventura County history told a courtroom Thursday that he hopes to repay his creditors.

“I intend to devote my energy and efforts trying to do that,” Olen B. Phillips testified at his Ventura County Superior Court trial.

The promise came during Phillips’ first full day on the stand since the defense opened its case Monday after nearly six weeks of testimony by prosecution witnesses.

“I’ll never live that long,” muttered one of Phillips’ alleged victims, Frank Witherspoon of Thousand Oaks, as he listened to Phillips’ testimony. Witherspoon, 79, said he lost $30,000 in trust deed investments through Phillips.

Phillips’ attorney, Steven D. Powell, will resume questioning of him today. Deputy Dist. Atty. Rebecca S. Riley will then begin her cross-examination.

An 81-count indictment charges that Phillips and two associates bilked 21 investors out of nearly $3 million. Altogether, about 2,000 people in Ventura County and the San Fernando Valley lost about $30 million in Phillips’ real estate enterprises, investigators said.

In many cases, Phillips sold limited partnerships in real estate and then encumbered the properties with liabilities far exceeding their value, investigators said. Investors were told that the money would finance construction but much of it was used to pay interest to other investors.

Phillips acknowledged in his testimony Thursday that his company, Phillips Financial Group, was being “eaten alive” by cash-flow problems before it closed in December, 1989. In a typical month, he said, the company needed $700,000 just to repay the principal and interest due on trust deeds.

But Phillips insisted that if the company had been allowed to remain open, all of its creditors would have been repaid.

“That’s what you intended?” Powell asked.

“Absolutely,” Phillips replied.

In his opening statement Monday, Powell said the company’s failure was caused not by fraud, but by overzealous regulators who “jumped the gun” and shut down a viable business.

“There was more than enough money . . . to pay off every single trust deed lender” as well as the limited partners, Powell said. He said, however, that when the Department of Corporations and the Ventura County Sheriff’s Department forced the company to shut down, they doomed Phillips’ efforts.

Investigators have said they had to close the company to prevent further losses to investors.

In an apparent effort to bolster his view that investigators acted prematurely, Powell on Thursday had Phillips describe in detail the long, costly process involved in developing a property. At one point, Phillips said it usually took three to seven years for a development to become profitable.

In a folksy drawl that he learned growing up in Texas, Phillips also said he has not filed bankruptcy and considers the trust deeds a personal obligation that he hopes to repay.

Although Phillips, 51, is a United Airlines pilot, he has been ruled indigent because of his financial problems. The county is paying the costs of defending him and his co-defendant, Charles Francoeur, 35. The third defendant, Felix Laumann, 57, of Cambria, will be tried later.

Phillips’ testimony resumes today in Judge Frederick A. Jones’ courtroom. The jury, which began hearing the case on April 22, is not expected to begin deliberating for at least two more weeks. Two of the original jurors have been replaced with alternates, leaving only one alternate if another juror should have to step down.

All of the defendants are free on $150,000 bail. If convicted, they could be sentenced to a maximum of 10 years in prison.