Torrance Trying to Recoup $6.2 Million Lost in Huge Scam : Government: Mayor is pessimistic that financial adviser Steven Wymer, sentenced to prison for 14 1/2 years, will be able to repay the money.


With investment adviser Steven D. Wymer headed for prison, the city of Torrance is pressing ahead with its legal battle to recoup some or all of the $6.2 million it lost when Wymer’s financial empire collapsed.

Wymer was sentenced to 14 1/2 years in prison Tuesday after pleading guilty in a massive financial scam that cost Torrance and dozens of other cities millions of dollars.

His ability to repay those cities remains in doubt. Although his houses, luxury cars and other assets have been turned over to the government, they are valued at only $9 million, a mere fraction of the $92 million prosecutors say he owes the cities.


Torrance has been unable to retrieve one cent of its missing millions, and the city may not close its books on the Wymer scandal for years.

“The chances of recovering the bulk of the sum are very, very slim,” said Mayor Katy Geissert.

The Wymer scandal surfaced just days before Christmas, 1991, when cities that had entrusted funds to the Irvine-based financial adviser discovered their money was missing.

Wymer managed and invested funds totaling more than $1 billion for Torrance, Orange and dozens of other cities, primarily in California and Iowa. He has admitted that after he lost money through bad investments, he disguised the losses to clients and regulators by forging documents and promising high returns.

Prosecutors said last year that Wymer siphoned off up to $12 million to finance a lavish lifestyle, lost $66 million in bad securities deals, and paid $75 million in bogus profits to hide faked securities transactions.

In Torrance, the scandal prompted widespread criticism of City Treasurer Thomas C. Rupert, who took leave from his post in early 1992 and retired a year later.


Wymer pleaded guilty last fall to nine federal charges of racketeering, stock fraud, mail fraud, bank fraud and obstructing justice.

At Tuesday’s sentencing, U.S. District Judge Richard A. Gadbois Jr. ordered Wymer, 45, to return $92 million to the cities. That includes $4.88 million earmarked for Torrance, which an attorney for the city describes as the principal invested with Wymer, not including an additional $1.3 million in interest the investment was to have earned.

But since Wymer’s assets total only $9 million, the cities would get only 10 cents on the dollar, said Assistant U.S. Atty. Jean Kawahara.

“What it does mean is that if he earns any money, it’s subject to this restitution,” Kawahara said. “He’s demonstrated that he had been able to be quite successful. Whether he can do it in some (other) line of business . . . Then the cities may get some amount of money from him.”

For now, Torrance is looking elsewhere for its lost funds. The city sued several brokerage dealers in a case that is pending in federal court. Torrance also has a related lawsuit pending in Los Angeles Superior Court against the city’s former auditors.

The city had filed suit in federal court against Wymer and his companies, but the action stalled when Wymer declared bankruptcy.


Years could pass before the legal machinations are concluded.

“The lawsuits that are pending at this point are complex actions,” said Christopher G. Caldwell, an attorney representing Torrance in the Wymer case.

At Torrance City Hall, Geissert said she would have preferred a stiffer penalty for Wymer, such as a 20-year sentence.

“I think it would have been well-justified, although 14 1/2 years is a significant sentence,” the mayor said.

Rupert, too, favored a 20-year sentence, saying the Wymer affair “practically destroyed” his life.

“The moral is, you can never beat a crook. There was nothing anyone could have done. We have audits year after year and were always given AAA ratings,” Rupert said.

“I think he deserves to repent, and this is a good way to make him do so,” Rupert said.

Randal C. Archibold contributed to this report.

The Victims

U.S. District Judge Richard A. Gadbois Jr. on Tuesday ordered Steven D. Wymer to make the following restitution payments to former clients in California. Torrance says its total losses were


$6.2 million, taking interest into account.

City of La Quinta: $7 million

Coachella Valley Joint Powers Insurance Authority: $6.9 million

City of Orange: $5.7 million

City of Palm Desert: $5.6 million

City of Torrance: $4.9 million

Palm Desert Redevelopment Agency: $3.3 million

City of Indio: $3.2 million

City of Sanger, Calif.: $2.4 million

City of Big Bear Lake: $1.9 million

City of Loma Linda: $1.8 million

Grand Terrace, Calif.: $500,000

Source: U.S. Department of Justice