Guilty Plea Expected in Wymer Case : Courts: Money manager is expected to forfeit assets and help trace losses of local governments, including the city of Orange, that he’s accused of bilking out of $100 million.

Multimillionaire money manager Steven D. Wymer, accused of cheating dozens of local governments out of more than $100 million, is expected to plead guilty today, help trace the losses and forfeit his own assets to the victims, his lawyer said Monday.

The plea bargain was detailed by Wymer’s attorney Mark S. Roberts, who said Wymer believes cooperating with authorities and the small agencies that trusted their money to him--including the cities of Orange and Torrance--is the best route for everyone.

“Now that he has the specter of the trial behind him, he can devote his time helping the cities recover (funds),” said Roberts of Fullerton. “That’s what he wanted to do all the time. He wants to put this behind him.”

Wymer, 44, is expected to enter a guilty plea for a third of the 30 counts of securities fraud, money laundering, obstruction of justice and other federal charges against him. This would end a civil case against him by the Securities and Exchange Commission and a criminal case against him by the U.S. attorney’s office, his attorney said.

It is not clear whether Wymer will serve any prison time, and it was unknown what penalties U.S. District Judge Richard A. Gadbois will order for him.

But what is clear is the legacy of litigation that persists in the wake of alleged wrongdoing by Wymer, who is out on $600,000 bail and wears an electronic surveillance device.

After the fall of Wymer’s financial empire--he once managed as much as $1.2 billion in municipal funds--cities and other government agencies have been forced to file a spate of suits in an effort to recover at least part of the millions of dollars of taxpayers funds that have disappeared.

Some of the suits have pitted city against city.

It remains to be determined whether Wymer’s cooperation will make it easier for victimized cities to get their money back.

California cities that lost money include Palm Desert, Big Bear Lake, Indio, La Quinta, Loma Linda, Grand Terrace, Sanger and Beaumont. Numerous government agencies in Iowa and Colorado were also victimized.

“It’s going to take some time to sort things out,” said Rancho Mirage attorney Dave Erwin, who was hired by Palm Desert, Indio and Big Bear Lake to recover their missing funds. “It isn’t going to work that easily. I don’t think that there will be a magic illumination of where things are. I wish it was.”

Many cities said whatever the details of Wymer’s agreement, they do not expect to drop their civil lawsuits to recover all their missing funds. While Wymer claims to be destitute, those municipalities would like to get the money directly from him.

“If he (Wymer) coughs up the $6.2 million, I will be glad to cancel the suit,” said Torrance City Atty. Kenneth Nelson.

Realistically though, the chances of recovering any part of the lost money are better if other sources are targeted, city attorneys said. Torrance, for instance, has hired an outside law firm to go after onetime auditor, Deloitte & Touche, claiming that the company failed to disclose problems it had with Wymer.

In Orange, Michael B. Jeffers, assistant city attorney, said that his city’s lawsuit against Wymer and Refco Securities, a New York brokerage firm with whom Wymer deposited some of the missing funds, and Interstate Bank of Denver, will continue, despite the plea bargain.

Orange, in its lawsuit, said it had lost $7 million.

“We are aggressively pursuing our legal suits for the full amount,” Jeffers said Monday. The city is fighting a motion by Refco Securities to have the case heard by an arbitrator.

Some of the suits have been filed between other victims.

Attorney Erwin said that Palm Desert, which lost $12.3 million, and Indio, which lost $4.3 million, have filed a joint suit against the Iowa Trust, an agency that pooled investment money from 88 cities and other public agencies in that state.

The Iowa Trust, which lost more than $65 million, is involved in half a dozen suits, said William Roach, a spokesman for the Iowa attorney general’s office, which is investigating the case for the Iowa Trust.

Many of the communities the Iowa Trust represents, Roach said, are destitute or have been forced to put off capital improvements, such as new libraries, roads and police stations.

Getting all the money back is a top priority, even if it means going after other cities for it. None of the trust’s lawsuits name Wymer.

“This is not a question of suing Wymer,” Roach said. “It’s a question of sorting out with other communities all the claims on the money.”

The already complex case could be further complicated by the plea agreement.

As part of the plea, expected to be entered at 4 p.m., the SEC will take control of the money already identified by different public and private institutions, said a source close to the settlement. The money will then be distributed by that agency, according to the source.

“They will decide where the funds will go,” he said.

Wymer and his wife will also reportedly turn over virtually all their assets as part of the agreement, according to the source.

Those assets, valued at more than $10 million, include 13 cars, four boats, properties in Newport Beach; New York City; Sun Valley, Idaho, and Palm Beach County, Fla. The property and other assets could be sold to help repay the cities.

Most of the assets were seized after Wymer’s Dec. 17 arrest.

Authorities have charged that Wymer, through two companies he owned--Institutional Treasury Management in Newport Beach and Denman & Co. of Irvine--bilked his clients by diverting money from their accounts in a financial shell game and falsifying documents to show that the money was still intact.

Federal authorities have been tight-lipped about details surrounding the press conference and have neither confirmed nor denied that a plea agreement has been reached.

But Roberts on Monday said that Wymer, in appearing before Judge Gadbois, “will plead guilty.” That settlement comes after months of negotiations.

Roberts, who has stressed his client’s innocence by saying that the money was lost through bad investments, said that the plea was in the best interest of everyone, including Wymer.

Wymer could have agreed to fight the charges in court, Roberts said. But that ordeal would have put a strain on his family--his 20-year-old daughter still suffers brain damage from an automobile accident in January--and cost the cash-strapped cities even more money.

The Associated Press contributed to this report.

Fallout From Wymer

Steven D. Wymer is expected to formally enter a guilty plea in U.S. District Court in Los Angeles today, settling government civil and criminal cases against him. He is accused of defrauding clients--mostly financially strapped cities and states--of more than $100 million. That’s enough money to pay 2,000 Orange County teachers a yearly salary of $50,000. A look at how Wymer marketed his services and the fallout:

How he did it: Touting its ability to produce double-digit returns by investing in high-yield treasury securities, Wymer’s firm, Institutional Treasury Management Inc., persuaded recession-weary cities to use his services to counter falling interest rates. He used political allies to help get his foot in municipal doors.

His allies: Harold Brewer, finance director for Riverside; Kirby Warner, former assistant city manager and treasurer of Palm Desert; Joseph Welsh, president of the Iowa state Senate.

His method: Instead of charging the customary commission, Wymer’s contracts with cities called for his firm to get 30% of the net trading gains, and the cities to get 70%.

The casualties: Dollar amounts in millions State of Iowa: $65.0 Palm Desert: 12.3 Coachella Valley district: 8.1 City of Orange: 7.0 Torrance: 6.2 Indio: 4.3 Sanger, Calif.: $2.8 Loma Linda, Calif.: 2.7 Big Bear Lake, Calif.: 2.5 La Quinta, Calif.: 1.6 Grand Terrace, Calif.: 0.7 Beaumont, Calif.: 0.5

Other states affected: Colorado, Nevada, Minnesota, Utah, Texas, Illinois, New Mexico, Wyoming, Oklahoma, Virginia, Florida.

Other countries affected: Micronesia.

Source: U.S. Postal Inspection Service; some of the cities listed