Two Accused in Investment Scam Were Polished, Police Say : Fraud: The pair face 28 counts of grand theft. They leave a trail of suits, charges spanning nearly a decade.

When it came to taking other people’s money, police say few did it better than David James Cook and Joseph Anthony Veltre.

Gregarious and physically imposing, Cook played the role of consummate deal maker who lured investors from all walks of life--bankers, dentists, travel agents and the retired--to his tiny Newport Beach mortgage company.

With Cook tossing out subtle references to the firm’s nonexistent corporate jet and fabrications of his multimillion-dollar net worth, associates said they unquestioningly handed over hundreds of thousands of dollars to the man with the shaved head and his quiet but brainy partner, Veltre.

Cook “was telling everybody the same thing,” said the firm’s former attorney, John W. Stipe, “that he was a former president of a large national bank who handled assets of more than $200 million. There was no reason to disbelieve him. It would have been such a big lie, you just didn’t even question it.”

Then the trouble began.

Last week, authorities charged both Cook and Veltre with 28 counts of grand theft in an alleged mortgage investment scam that is expected to top $3.5 million.

News of the charges so stunned some victims that they delayed reporting their involvement out of embarrassment.

But if any of the investors with American Federal Mortgage Corp. ever had a doubt about who was really managing their money, all they had to do was look to the courts and follow a trail of lawsuits and allegations of fraud that have followed this unlikely pair of business partners for nearly a decade.

Court records show that Cook was placed on probation for three years in 1985 after pleading guilty to stealing $25,000 from a Huntington Beach savings and loan.

“It’s really amazing,” said Paul Purcell, a local attorney who first encountered the pair seven years ago when his client sued Cook and Veltre for $10 million. “Lawsuits mean nothing to a guy like Cook. He laughs at them and uses them to paper his walls.”

Between the two, records show that banks and other financial institutions have sought and won court orders to collect thousands of dollars in judgments in about half a dozen legal battles.

Although some were dismissed, the lawsuits contain allegations of financial improprieties that run the gamut from simple breach of contract to conspiracy and racketeering.

In one of the thickest files, the Long Beach-based Queen City Bank charged that Cook and Veltre participated in a loan scheme that eventually lost the bank more than $275,000.

According to court records and a bank executive, Cook, Veltre and five others worked through bank officer Robert LeDuc to arrange various loans. The lawsuit states that LeDuc knowingly accepted fraudulent loan applications, tax records and credit reports to obtain the loans between April and July of 1986.

In return for his participation, LeDuc allegedly received kickbacks from the loan proceeds.

Although it has been seven years, bank Vice President Don McCrink easily recalls the case, mostly because he was hired, in part, to untangle the mess LeDuc, Cook, Veltre and others left behind.

On one of the fraudulent loan applications, for example, McCrink said the bank, through LeDuc, approved a loan for a nurse who reported an income of $140,000.

“I don’t know of any nurse making that kind of money,” McCrink said.

Shortly after the scam was uncovered, McCrink said LeDuc “went out to lunch and never came back.” Some time after the departure, the bank executive said he learned that LeDuc had suffered a heart attack and died.

“I went to the funeral just to verify it was him,” McCrink said.

The bank was awarded judgments against Cook and Veltre, but McCrink said the two “just disappeared,” making collection too expensive to pursue.

“We have some people still paying on the judgments, but I’m positive we haven’t collected anything from them. We cleared our file on it and took our lumps. Trying to collect from them became a situation of throwing good money after bad money. It was more of a situation where people felt they got (ripped off).”

That uncomfortable feeling has brought at least 28 angry investors with American Federal Mortgage Co. to authorities in Newport Beach, where they have claimed that the duo of Cook and Veltre were back at work.

Newport Beach Police Sgt. Al Fischer said the department first opened its investigation in November when a string of investors began complaining that the company had either missed or stopped making interest payments on their investments.

Acting with little information about the company’s executives but with apparent strong confidence in their financial abilities, Fischer said some issued checks for hundreds of thousands of dollars for what they thought were secured interests in residential and commercial mortgages.

In subsequent searches of the company’s offices and from files retrieved from Cook’s car, authorities found that the same deal had allegedly been sold many times over.

On three separate occasions, for example, investors were allegedly sold interests on a home loan in which the borrower was a deceased Orange man.

“They went to a lot of work to create an illusion that things were the way they should be,” Fischer said. “It was very sophisticated. They had a story for everything.”

Although unfamiliar with the civil lawsuits involving his client, attorney James D. Riddet said Cook paid full restitution as ordered by the court when he pleaded guilty to grand theft.

In the current case, Riddet said he did not believe the past civil cases would be admissible in court and should not impact on the strength of the state’s case.

However, Riddet said he was “outraged” by the $250,000 bond that has kept his client in Orange County Jail since March 11. Veltre has been released on a $100,000 bond. Neither Veltre nor his attorney could be reached for comment.

Cook “has been aware of this investigation for two or three months,” Riddet said. “He had every opportunity to flee before his arrest, but he didn’t. That should say something. Bail in that amount is absurd.”

Stipe, the company’s former attorney who is now assisting authorities in their investigation, said mortgage company executives were attempting to keep money flowing through the company until just days before their arrests.

Even as authorities were searching through the company files, Stipe said Cook and Veltre called the investors to a March 5 meeting at a local hotel. Stipe said the executives coolly explained to a gathering of about a dozen how the company would be “winding down” its operation and that a fund would be established to continue making payments to investors.

For those who were not yet alerted to potential trouble, Stipe said it became clear quickly when he began questioning their plan. But even then, he said, some investors, in an attempt to retrieve some of their money, were trying to negotiate a quick settlement.

“We all knew we had been (taken),” Stipe said.

Reflecting on past conversations with Cook, Stipe said the tall and strapping executive talked of the “two or three corporate jets that were at his disposal” and the big-money backing of a national financial institution.

Although on occasion, Stipe said Cook did charter jet flights for travel with his friends, the attorney said “the corporate jet was a Piper Cub.”

“There was no company behind him,” Stipe said. “It was only paper, absolutely paper.”