Fraud Charges Filed in First Pension Scam : Crime: Three face 10-year sentences in the $121.5-million Orange County mortgage pool scheme.

Federal prosecutors filed mail-fraud charges Monday against the three operators of First Pension Corp., the failed Irvine pension management company accused of running a $121.5-million Ponzi scheme. The three, who have already agreed to plead guilty, face maximum prison terms of 10 years and fines of up to $500,000 each. They will be arraigned Aug. 1 in U.S. District Court in Los Angeles on two counts each of mail fraud.

The charges were filed against against Orange County businessman William E. Cooper, 50, of Villa Park and his two long-term associates Robert E. Lindley, 51, of Laguna Niguel and Valerie Jensen, 47, of San Juan Capistrano.

“This is one of the longest-running and most elaborate schemes I have ever seen,” Assistant U.S. Atty. John Libby said. “To a certain extent, they had to fool their own employees as well as investors.”

Also Monday, the Securities and Exchange Commission asked the court to appoint Donald W. Henry, a Woodland Hills attorney, as receiver for the mortgage pools operated by First Pension and other related companies. The receiver would refund any recovered money to investors.

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Attorneys for the three said their clients are cooperating with authorities and will plead guilty at next week’s arraignment. Cooper is represented by Los Angeles lawyer Robert C. Bonner, former chief of the federal Drug Enforcement Agency and a onetime federal judge.

Officials allege that, beginning in 1982, the three operated an elaborate pyramid scheme that misled clients into investing in mortgages that did not exist. An unknown number of First Pension’s 8,000 clients lost $66.7 million they had invested and another $54.8 million in interest lost.

The two counts of mail fraud relate to quarterly account statements mailed to First Pension clients on Dec. 31, 1993, and March 31, 1994, U.S. attorneys said.

As an example of the level of deceit, prosecutors allege that in 1990, Cooper hired an actress to portray an auditor for the State Department of Corporations after an employee confronted Cooper with charges that no trust deeds existed in the mortgage pools.

The actress was given a phony Corporations Department business card and then sat in the offices of Vestcorp Securities, the brokerage arm of First Pension, where she pretended to review files for three weeks, U.S. attorneys said. A letter was then drafted on bogus Corporations Department stationery stating that the files were in order.

Angry investors said Monday that 10 years in prison is not enough for the three First Pension principals, and several expressed doubt that the three will get the maximum term.

Gordon Reiter, 55, of Torrance, who lost $180,000 with First Pension, called the mail-fraud charges “wimpy in view of the spectacular crime.”

Despite the charges, the First Pension case is not closed, an indication that U.S. attorneys are still investigating other people associated with the company.

First Pension, with an estimated 8,000 clients and accounts valued at $350 million, declared bankruptcy April 22, one day after Colorado state banking authorities seized Summit Trust Services, a Denver-based firm established by Cooper to manage clients’ money.

Documents filed by the U.S. attorney’s office Monday charge that the three principals engaged in an elaborate scheme designed to hide mounting losses at First Pension by diverting clients’ money to pay their own salaries, make payroll for employees, meet operating expenses and cover losses. Diverted money was also used to invest in new businesses, the U.S. attorneys said.