Phillips Found Guilty of Theft : Trial: The Thousand Oaks financier is acquitted of 78 charges. The fraud case was called the county’s biggest ever.

Olen B. Phillips, a Thousand Oaks real estate financier accused of stealing millions of dollars from investors in Ventura and Los Angeles counties, was convicted of one count of grand theft Tuesday but was acquitted of nearly all other charges.

After deliberating more than three weeks, the Ventura County Superior Court jury also convicted Charles J. Francoeur, vice president of Phillips’ real estate investment empire, of four counts of grand theft and one count of conspiracy.

Phillips, 52, faces a maximum sentence of three years in prison while Francoeur, 35, an Agoura resident, could receive up to seven years. Both asked to be considered for probation when Judge Frederick A. Jones sentences them on Sept. 11.

Deputy Dist. Atty. Rebecca S. Riley said she was disappointed at the outcome of the four-month trial--once billed by investigators as the biggest fraud case in Ventura County history. Although Riley obtained felony convictions against both defendants, they were found not guilty on most charges.

The jury acquitted Phillips of 78 counts alleging grand theft, conspiracy, or securities violations, and acquitted Francoeur of 71 charges involving theft or securities fraud. The panel deadlocked on two securities-fraud counts involving each of the defendants.

If convicted on all charges, the defendants could have received maximum sentences of 10 years in prison.

“I’m disappointed, and I’m sure the victims are disappointed,” Riley said. “I think the evidence was there. . . . But the jury has spoken.”

One juror, George Muennich of Simi Valley, said that in evaluating the securities-fraud charges, the panel was troubled by the legal definition of a security, which he said is vague. None of the 54 securities-fraud counts in the 81-count indictment resulted in a conviction.

Most of the remaining counts, Muennich said, were clouded by “plenty of reasonable doubt.”

Phillips’ legal troubles may not be over, however. The FBI is investigating other aspects of his financial affairs, particularly his role as a director of the defunct United Community Bank of Thousand Oaks. United Community was the parent company of Westlake Thrift & Loan of Westlake Village, which was closed by regulators in 1988.

FBI officials declined to comment Tuesday.

In addition to his real estate activities, Phillips has worked as a captain for United Air Lines but has been on leave during the trial. United officials did not respond to queries Tuesday about whether the conviction will affect Phillips’ job.

Phillips and Francoeur--who remain free on $150,000 bail each--declined to comment as they left the courtroom surrounded by smiling relatives and supporters. Phillips’ attorney, Steven D. Powell, also had no comment.

Francoeur’s attorney, William B. Maxwell, said his client was “very upset at the convictions, and rightfully so.”

It was the not-guilty verdicts, however, that caused consternation among several investigators and about 20 investors, who sat in shocked silence as the court clerk read the jury’s findings.

“They had good attorneys,” Sheriff’s Sgt. Patrick Buckley said after the verdicts were read. “I don’t agree with the verdicts . . . but he (Phillips) is a convicted felon now. It doesn’t matter how many counts.”

Malibu resident Jackie Lahr, wife of a United pilot who invested with Phillips, said she was “extremely disappointed and extremely disgusted.” All together, she said, members of her family lost $400,000 invested in Phillips’ company.

Another investor, Gale Stropahl of Thousand Oaks, said she lost nearly $100,000. She said she has no hope of recouping her money but would have gained some satisfaction at seeing the defendants convicted of all charges.

“You bet,” Stropahl said. “They’re both guilty. They did terrible things to people. It’s annoying to me that they got away with it. . . . If I’m ever prosecuted, I want it to be in Ventura County.”

Both Lahr and Stropahl said they did not fault Riley. Before discharging the jury, Judge Jones also commended the prosecutor, saying he had not seen a case “better or more adeptly prosecuted.”

Muennich, the juror, said that although Phillips headed the company, the evidence was stronger against Francoeur because he was more involved in the firm’s day-to-day dealings. “He did the work, the transactions,” Muennich said. “He put his name on them while Phillips was flying airplanes.”

But Muennich said Phillips clearly was guilty of the theft charge that resulted in conviction, which involved a Colorado pilot who invested $15,000.

“Phillips made a mistake there,” Muennich said. He said the evidence showed that Phillips had promised the investor a trust deed and never delivered it. “The other grand theft counts were all questionable,” Muennich said.

The indictment, handed up in February, 1991, listed 21 investors who allegedly lost nearly $3 million, but investigators said hundreds of investors in the two counties lost as much as $30 million.

Investigators said the victims included teachers, physicians, attorneys, pensioners, police officers and Phillips’ fellow pilots at United. They invested in limited partnerships and other real estate deals put together by Phillips’ company, the Phillips Financial Group, investigators said.

In some deals, investigators said, the company took investors’ money in exchange for trust deeds that were never recorded, leaving the investors unprotected when the properties went into foreclosure. Some properties were encumbered with hundreds of unrecorded deeds, investigators said. Money obtained from investors to buy specific properties was instead used to pay interest to other investors, investigators said.

The defense attorneys argued that Phillips and Francoeur were victims themselves whose business was destroyed by overzealous state and local regulators. The attorneys acknowledged that the company had problems, but they maintained that it could have been saved if investigators had not shut it down in late 1989.

Although many investors were bitter about their losses, several others stood by Phillips and said they did not hold him responsible. The son of a Texas sharecropper who settled in Thousand Oaks in 1966, Phillips had been regarded as a pillar of the community and was active in church affairs when he was indicted.

More than 14 months passed between the indictment and the start of the trial in April. At first, the defendants had trouble finding and paying for private attorneys willing to take the complicated case.

Eventually, the Superior Court declared them indigent and appointed counsel for them. Later, at the court’s urging, the Board of Supervisors reluctantly approved spending $385,000 in taxpayer funds on accountants and investigators needed in their defense.

A third defendant named in the indictment--Felix B. Laumann, 58, of Cambria, another company vice president--was granted a separate trial on account of illness. That trial is tentatively scheduled to start next month.

The Phillips-Francoeur trial began with 12 jurors and 3 alternates, but several were excused during the lengthy proceeding. Two weeks ago, after a juror was excused during deliberations, the lawyers agreed to let the remaining 11 decide the case.

“It was some experience,” said Muennich, a retired engineer. “I’m glad it’s over.”