Steven Wymer Given 14 1/2-Year Prison Term : Courts: Newport Beach investment adviser stole $92 million. Clients included many California cities.

Steven D. Wymer, the Newport Beach investment adviser who stole $92 million from clients, was sentenced Tuesday to 14 1/2 years in prison for what prosecutors said was one of the nation’s biggest and most devastating financial scams.

It was a victory for prosecutors, who had said Wymer should serve 15 1/2 to 19 1/2 years.

In pleading guilty and agreeing to pay $92 million in restitution, Wymer had asked for a sentence of less than 10 years. He contended that the government exaggerated the seriousness of his crimes.

Wymer invested more than $1 billion for dozens of cities, most of them in Iowa and California. But he soon began shifting money around to hide trading losses and the millions of dollars he siphoned off to buy vacation homes and vintage cars. Many of the missing millions will never be recovered, prosecutors said.

Meanwhile, some of the cities he defrauded have had to lay off workers, defer building projects and borrow money to pay their bills.

U.S. District Judge Richard A. Gadbois Jr. acknowledged Wymer’s cooperation with those cities--and in an ongoing criminal investigation of some of Wymer’s associates--in sentencing Wymer to slightly less than what prosecutors had asked for.

“Wisdom has come a little late to Mr. Wymer,” Gadbois said. “But it has come.”

Clad like the three lawyers who accompanied him--in a gray suit and white shirt--Wymer was stolid as the judge pronounced sentence in quiet, measured tones.

“I know that my actions were wrong,” said Wymer, 45, his voice breaking. “I have no excuses for my actions.

“I believe I can--and will--be a contributing member of this society.”

As he left the federal courthouse in downtown Los Angeles with his arm around his wife late Tuesday afternoon, Wymer refused to comment.

The sentence may be reduced at a subsequent hearing if Wymer continues to cooperate with the criminal investigation. Prosecutors would not say who is being investigated. But Wymer told a congressional subcommittee in March that some broker-dealers helped him defraud the cities.

The judge told Wymer that he will intercede with the federal Bureau of Prisons so that Wymer can do his time in the minimum-security prison camp at Lompoc despite the length of his sentence.

Wymer was ordered to begin serving the sentence in two months, on July 11.

The delay was granted because he is still needed for depositions by a Colorado bank he defrauded and so that he can see his adult daughter, who was critically injured in a biking accident two years ago.

Despite Wymer’s cooperation with the cities, the judge said, “not one centavo” has been returned.

And, as the Securities and Exchange Commission pointed out in a letter to the judge urging a lengthy sentence, it took SEC investigators months to begin to unravel Wymer’s complicated scams before he began to cooperate.

Nevertheless, said Assistant U.S. Atty. Jean A. Kawahara, the government was “satisfied with the sentence. It’s a substantial, significant sentence for white-collar crime.”

The sentencing had been repeatedly delayed since January as government lawyers and Wymer’s attorneys haggled over the application of federal sentencing guidelines. The government wanted to sentence him quickly; Wymer’s lawyers wanted to wait and see if he could turn up any money for his clients, which might shorten the sentence.

The cities were gulled by Wymer’s promises of unusually big returns on their investments. Most never checked Wymer’s background, which included two failed businesses, a foreclosure on property he owned and lawsuits by creditors. Wymer promised clients that he was putting their money in extremely safe investments: government securities such as Treasury bills and bonds.

In asking the judge for leniency, Wymer said he never intended to defraud. The entire scheme, he said, started with a single bad trade in 1986 that he tried to cover up. As he shifted funds from one account to another, Wymer said, the amounts began to snowball.

But that argument doesn’t hold water, the government said: In six years, Wymer spent $29 million in clients’ money on himself. That included $635,000 from the desert town of La Quinta to buy beachfront property in Florida; $400,000 for a dozen luxury and classic cars, including a new Ferrari; and a $450,000 private plane.

What’s more, Wymer’s arrest set his clients scrambling to get their money back in a legal brawl that has cost them hundreds of thousands of dollars to sue each other, associates of Wymer and the broker-dealers Wymer used, which the cities hope will have “deep pockets” in case their money doesn’t turn up in an account somewhere. Big Bear Lake alone has spent more than $90,000 trying to recover its money, the government said recently.

The scandal ruined the reputations of some elected officials, including the man who was the elected treasurer of the city of Torrance for 30 years. He had to be put on disability leave after the city lost $6.2 million.

Torrance Mayor Katy Geissert called the sentence appropriate, saying it was “a significant amount of time.”

Still, she said, “that’s a small price to pay for the pain and agony and suffering that he has caused many jurisdictions.”

“The $6 million we lost would have put a lot of police officers on the street and would have fixed a lot of potholes,” Geissert said.

The scam cost some city employees their jobs, like the 63 laid off in Marshalltown, Iowa, after the city lost $2.5 million. And it caused Dubuque, Iowa, to default on millions it owes police and firemen’s retirement funds.

“Wymer deserved a very stiff sentence,” said Iowa Atty. Gen. Bonnie J. Campbell in a statement. “He caused terrible problems for people and communities all over the state.”

Wymer agreed to repay the missing $92 million as part of his guilty plea, but everything he owns has already been turned over to the government, which says the luxury cars, houses, art and the like are worth about $9 million. Wymer’s lawyers say the value may be as much as $15 million.

Wymer mailed clients fake statements showing phony balances and profits. The city of Orange, for instance, was supposed to have $7.2 million in its account. When Wymer’s companies crashed, however, investigators found that the balance was $4,000.

Another Orange County city, Stanton, is indirectly affected because it is a member with other cities of a self-insurance pool Wymer also defrauded. The 23 towns in the pool lost $7 million.

Orange is suing Refco Securities Inc. in New York, one of the broker-dealers Wymer did business with; Security Pacific National Trust Co. and Moreland & Associates of Newport Beach, its auditor at the time of the Wymer investments.

“It would have been my idea to lock him up and throw away the key,” Orange Mayor Gene Beyer said. “I wish the court had ordered even more restitution.

“I’m not very compassionate toward people like that.”

Times staff writers Helaine Olen, Chris Woodyard, Dean Takahashi and Randy Archibold contributed to this report.

Wymer’s Legal Tangles

1991

* Civil lawsuit, Dec. 6: Securities and Exchange Commission officials file civil lawsuit in U.S. District Court against Steven D. Wymer, a Newport Beach investment adviser. He is accused of defrauding his clients of more than $100 million. His clients include dozens of cities including Orange and Torrance, as well as banks, thrifts, pension funds and county governments in 13 states.

* Frozen assets, Dec. 12: U.S. District Judge Richard A. Gadbois Jr. freezes Wymer’s personal and business assets.

* The arrest, Dec. 17: Wymer is arrested at his million-dollar Newport Beach home on federal fraud charges and denied bail by U.S. Magistrate Judge Venetta S. Tassopulus.

* Freeze lifted, Dec. 20: Judge Gadbois lifts freeze on Wymer’s business assets, allowing victims a chance to recoup their losses.

1992

* The indictment, Jan. 2: Wymer is indicted on federal charges and vows to “vigorously defend himself.”

* The plea, Jan. 6: Wymer pleads not guilty.

* Seizure of property, Jan. 8: Federal authorities seize Wymer’s property, valued at $15 million. The seizure includes several homes, three boats and eight bank accounts.

* The bail, Jan. 9: Bail is set at $600,000. Wymer is also required to wear an electronic surveillance bracelet. Prosecutors allege that new evidence exists suggesting that Wymer misappropriated far more than originally suspected.

* More lawsuits, Jan. 15: Cities of Loma Linda and La Quinta, Calif., are first to file lawsuits against Wymer, seeking to recover $16.8 million in allegedly misappropriated funds. Four months later, the city of Orange files suit.

* Suit settled, Feb. 19: Wymer agrees to settle SEC civil suit, allowing the agency to focus on recovering investors’ money.

* Seeking shelter, March 12: Wymer’s companies file for bankruptcy.

* Change of plea, Sept. 29: Wymer pleads guilty to fraud and is ordered to pay $209 million in restitution. He promises to cooperate with authorities in recovering as much of the missing money as possible.

1993

The sentence, May 11: Wymer is sentenced to more than 14 years in federal prison.

Sources: Times reports, U.S. attorney’s office.

Researched by JANICE L. JONES / Los Angeles Times