New Losses Seen in Alleged Real Estate Scam : Inquiry: Newport Beach police identify more victims in investment case. Estimate of money lost is now put at more than $3.5 million.

Losses in an alleged real estate fraud run by two Newport Beach businessmen have far outstripped the initial estimate of $1 million and now could top $3.5 million, authorities said Monday.

Newport Beach Police Sgt. Al Fischer said additional victims in the investment scam allegedly operated by the American Federal Mortgage Corp. were identified during the weekend, boosting the total from slightly more than a dozen to 28 investors.

Fischer and Deputy Dist. Atty. Daniel B. McNerney said Monday that one investment group identified Friday may have lost more than $1 million alone when its members purchased interests in home and commercial mortgages that Newport Beach police have said were supported by falsified documents.

Other victims included members of an Orange company’s employee profit-sharing fund, who lost a total of $100,000, and a Newport Beach woman who Monday abruptly arrived in Harbor Court to confront the mortgage company executives she said “took me for everything I have.”

“I’ve been crying all night,” said Sharon Nichols, a 48-year-old Newport Beach travel agent who invested $100,000 with the company seven years ago. “I’ve been chasing after them forever. Now, I know I’ve lost it all.”

Mortgage company officials David James Cook and Joseph Anthony Veltre appeared in court Monday where their arraignments on 28 counts each of grand theft were postponed until April 2.

Veltre, 41, of Mission Viejo surrendered to authorities Monday. His bond was set at $25,000. His attorney, George Peters, declined to discuss the charges but said his client was arranging to make bail late Monday.

Cook, 48, of Laguna Niguel, remained in the Orange County Jail in lieu of posting bonds totaling $250,000. Cook’s attorney, James Riddet, could not be reached for comment.

Fischer said Cook’s request for a bond reduction was denied Monday after authorities disclosed that they were also investigating whether Cook had been issued personal loans totaling $226,000 in the name of his deceased father.

Fischer said police considered Cook a “serious flight risk” after a search of company records produced a second driver’s license issued to Cook, also in the name of his dead father, Asa Cook. Police also alleged that Cook may have been attempting to alter his own birth records to obtain a new passport under his father’s identity.

“Mr. Cook is the epitome of a con man,” Fischer said. “If his lips are moving, you can bet he’s probably lying.”

Fischer said police found “boxes of fraudulent documents” in the trunk of Cook’s Buick when authorities arrived at the company’s offices at 4299 MacArthur Blvd. in Newport Beach on March 5.

Inside those boxes, police have found what are now alleged to be a number of broken deals with “high school buddies and longtime friends” who invested hundreds of thousands of dollars with men who didn’t even hold real estate licenses, according to the California Department of Real Estate.

The alleged scam even managed to proceed with the help of the company’s attorney whom, police said, unknowingly recruited additional investors from his contacts in the community. Attorney Thomas W. Stipe said he advised the company for more than two years and persuaded his wife to place more than $300,000 with the company. Her losses total about $200,000.

“All along they were ripping people off,” said Fischer, adding that the company continued to solicit business until early this month and well after police issued the first of their search warrants.

“It appears that (Cook) was continuing his activity so that he could get enough money to get out of town,” the sergeant said.

One of the company’s original investors, Sharon Nichols, described a lavish financial courtship conducted by Cook, all designed, she now claims, to make her feel more comfortable in parting with $100,000 back in 1986.

Nichols said she accompanied Cook and his wife on chartered jets to ski resorts and river-rafting trips. In the air, Cook and his guests dined on catered meals of lobster and crab.

“We had the finest of everything on that plane,” Nichols said. “He told me then that he was worth $21 million. Everybody was so impressed.”

At Harbor Court on Monday, Nichols told her story to police and turned over more records involving her own transaction.

“I think he was very surprised to see me,” Nichols said of Cook. “The police have everything on him now.”

Although equally outraged about their losses, others were too embarrassed to speak publicly about how they, too, invested thousands of dollars that may be lost forever.

One of them was an official with an Orange-based company that used $100,000 from its employees’ profit-sharing fund to purchase interests in two Los Angeles County residential mortgages in June, 1991.

For 18 months, officials said they received handsome returns on their investment, “paid just like clockwork.” But in December, 1992, the checks stopped coming. Only now, officials said, are they preparing to tell the 30 employees who stood to benefit from the plan that up to 10% of the fund may be lost.

“The saddest part about this is that we have some people who are about to retire and this money meant a great deal to them,” the official said. “It’s very sad.”

Before the investigation is complete, Fischer and McNerney said it was likely that total losses could rise even higher and additional charges could be brought against the two company executives.

Fischer said he had meetings scheduled Wednesday with a Los Angeles-based investment group that has potential losses of about $1 million.

“I really don’t think we know what the bottom line is yet,” Fischer said.

If convicted, both Cook and Veltre face maximum sentences of 12 years in prison and fines and restitution payments totaling $1.2 million.