2 Accused of Bilking Investors in Artwork : Crime: Chatsworth dealer and Sherman Oaks lawyer are charged. Police say clients lost nearly $1 million.

An art dealer and an attorney were charged Thursday with bilking clients out of nearly $1 million in fraudulent art investments, authorities said. The two men are suspected by police of also defrauding other victims in the elaborate scheme that lasted at least several years.

Attorney Lawrence Stephen Miller of Sherman Oaks and Chatsworth art dealer Robert Kenneth Goldman posted $100,000 bail each Thursday, one day after they were arrested at their homes on suspicion of grand theft.

Miller was indicted 10 years ago on charges of being involved in what the FBI described at the time as “the largest nationwide narcotics investigation ever.” He was identified by authorities as the lawyer who arranged the acquisition of a tuna boat allegedly used for smuggling drugs, but the charges were later dropped on a technicality, according to authorities and Miller’s lawyer at the time, Harland Braun.

But now police are on Miller’s trail once again, trying to determine if there are other victims of what they say was a scheme to take people’s money under the guise of using it to buy--and then sell for profit--the works of German contemporary artist Gerhard Richter.

What Miller and Goldman actually were doing, police say, was running a sophisticated Ponzi scheme in which they paid out just enough “profits” to clients out of their own pockets so the clients would then make large investments.

“They sucked them in deeper and deeper while making it look good,” said Detective Bill Martin, an investigator with the Los Angeles Police Department’s Art Theft Detail. “In the end, they walked away with a million dollars.

“We believe there are a lot more victims out there,” Martin said. “We believe there are other investors that haven’t come forward. We know of several.”

Miller and Goldman allegedly told clients they had a direct relationship with Richter, but police said the artist had nothing to do with the scheme.

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Last fall, the State Bar of California moved to disbar Miller for “conduct involving moral turpitude which extended over a six-year period of time,” even after he promised to “deal with his gambling addiction which was the cause of most of his professional failings,” according to bar association documents.

“At the height of his addiction, (Miller) was placing wagers of between $30,000-$40,000 on a weekly basis,” and using his client’s money to cover his other expenses, according to the bar association’s Oct. 25 decision to recommend disbarment. “(Miller) knew what he was doing was wrong, but that he could not help himself.”

Miller admitted to 22 acts of willful misconduct, including “misappropriating tens of thousands of dollars of his clients’ funds for his own personal use,” and writing 455 checks to clients that ultimately bounced, said the decision, written by state Bar Court Judge Michael E. Wine.

Miller ultimately sought help from a therapist and Gamblers Anonymous. “Originally, (Miller) was able to excuse his behavior by paying back his clients; however, over time, (Miller) felt more remorse, referring to himself as a ‘scumbag’ in his therapy sessions,” according to Wine’s decision.

Miller submitted his resignation in December before he could be formally disbarred. The resignation becomes effective April 29.

Meanwhile, the police investigation continues, and Martin said he and Detective Barbara Bella are pursuing leads gleaned from business records seized at the homes and offices of Miller and Goldman.

Neither Miller nor Goldman could be reached for comment. Braun, in an interview, said although he has represented Miller in the past, he was “definitely not representing him this time.”

One suspected victim of the investment scheme, police say, is Woodland Hills real estate agent Adam Sharon, who said he’s out almost $200,000, even though he checked out the two men thoroughly before investing--including calling the bar association.

“I’m not a total sucker,” Sharon, 49, said in an interview. “This involved something very elaborate.”

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Miller, 46, and Goldman, 44, made at least 33 transactions with five victims, one of whom has since died, authorities said. Besides Sharon, the victims included a 73-year-old West Los Angeles man who has claimed he lost $580,000 to Goldman and Miller between 1991 and 1993, police said.

Miller faces 12 counts of grand theft and Goldman faces 11. Their arraignment is set for May 11. The case is being handled by the district attorney’s office’s Organized Crime Unit.

The two men persuaded their clients to invest by bringing them to opulent offices, police said, and telling them the money would be placed in an independent trust to invest in Richter’s artwork.

But by last fall, at least one client--Sharon--became suspicious and confronted Miller when he found he couldn’t get money from the investment trusts. Sharon said Miller promised to pay him back his investment money in installments, but never did.

“All the money was supposed to go into segregated trust accounts,” said Sharon.

One source close to the investigation speculated that Richter was a good artist to use unwittingly in such a scheme because he worked in another country but had enough name recognition here so the value of his artwork could be verified by prospective clients.

“It was pretty sophisticated. And it worked for a long time,” said Martin. “This took place over a period of years.”

Martin said that all the investors checked out the two men as best they could.

“Every one of them was sophisticated enough to have it checked out, not knowing this guy was a crook,” he said of Miller. “They did their homework; they called the bar association and found out he was legit. However, they were wrong.”