3 First Pension Principals Plead Guilty to Fraud
Expressing “incredible remorse” at cheating thousands of investors out of $121.5 million in retirement funds, prominent Orange County businessman William E. Cooper on Monday acknowledged that the fraud engineered by his company began only one year after it was founded in 1982.
Losses at First Pension Corp. in Irvine were so substantial, Cooper said, that “it was clear we had violated laws and were violating laws and at that point we invested in other businesses in an attempt to bring money back into the business.”
While exhibiting little emotion after pleading guilty to fraud before U.S. District Judge John G. Davies, Cooper, 50, broke down and cried in a courthouse hallway after the proceedings. His voice breaking as he removed his glasses to clumsily wipe tears from his eyes, “I feel incredibly bad.”
“It’s something you can’t live with,” said Cooper, who until recently was a politically connected real estate investor and Villa Park resident who was a frequent contributor to Republican political campaigns.
Cooper and his two longtime business partners, Robert E. Lindley, 51, of Laguna Niguel and Valerie Jensen, 47, of San Juan Capistrano, each entered guilty pleas to two counts of mail fraud in connection with what has been described as one of Southern California’s most elaborate and longest running investment scams.
The three were accused of creating a pyramid scheme that bilked many of First Pension’s 8,000 clients out of $66.7 million in direct investments and $54.8 million in interest that would have otherwise accrued. Investors were enticed into phony second trust deed mortgage funds, which the defendants admitted Monday were shams from the start.
Each faces prison terms of up to 10 years and a $500,000 fine. Davies scheduled sentencing of the trio for Oct. 6, when he will decide how much restitution each must make to investors.
A handful of former clients who came to watch the proceedings were far from sympathetic.
“I would like to see him dragged away in handcuffs,” said Joseph Elia, 63, of Redondo Beach, who blames Cooper for the $100,000 he said he lost through First Pension. “What I can’t understand is how can he live now? These actions must be burned into his conscience forever, if he has one.”
Lindley, a former accountant, told the judge that the three principals continued to operate the scheme in an attempt to become profitable and return money to investors. He said he was pleading guilty “because I was involved in this scheme to hide losses from investors. I’m sorry I did it.”
The judge asked Lindley if we was aware he was breaking laws and he replied, “Yes, our objective in covering the fraud was to try to repay the debt that had been created.”
Jensen said that while she did not initially understand she was participating in illegal doings, she became “swept away by events and willingly participated in the acts I’ve been accused of.”
Cooper went to such elaborate lengths to try to protect the scam that prosecutors allege he hired an actress in 1990 to impersonate a state Department of Corporations investigator. She then pretended to review files for three weeks and a letter was then drafted on Department of Corporations stationery stating that all the files were in order.
By entering guilty pleas Monday, the three avoid a lengthy and costly trial. Prosecutors said the plea bargains have helped win the cooperation of the trio in trying to recover some of the lost funds, and said the three are working with the government to charge other people involved in the scheme.
“We’re happy that each defendant lived up to the plea agreement and pleaded guilty today,” Assistant U.S. Atty. John F. Libby said. “We will continue to work with the defendants to make sure funds are returned to investors.”
The sentencing followed an earlier hearing before U.S. District Judge Brian Q. Robbins, in which Cooper, Lindley and Jensen were arraigned. They were later fingerprinted and booked at the U.S. marshal’s office. Cooper and Lindley posted bail of $50,000, and Jensen was granted a one-week extension to come up with her $50,000 bail bond and was released. Cooper’s lawyer said that his client had his bail posted by a brother, Terry P. Cooper, who lives in Arizona.
Times staff writer Chris Woodyard in Costa Mesa contributed to this report.
First Pension’s Downfall
Irvine-based First Pension Corp. is accused of defrauding thousands of investors of more than $120 million in what officials described as an elaborate Ponzi scheme. A chronology of events:
* Aug. 12: First Pension contends that each of 23 virtually identical real estate investment pools are exempt from regulation as a public securities offering because they will be offered to no more than 35 sophisticated investors.
* Feb. 10: Summit Trust Services, a Denver company created by First Pension owner William E. Cooper to manage client funds, purportedly holds its annual board of directors meeting in Aliso Viejo. Subsequent investigation reveals it was actually a location where the company had a registered postal box.
* April 5: Valerie Jensen, First Pension’s president, resigns, citing job stress.
* April 21: Colorado banking regulators seize Summit Trust. Regulators appoint Andrew C. Snyder to take charge of the assets.
* April 22: First Pension files for protection from creditors in an Orange County federal bankruptcy court. Stunned investors flood the firm’s switchboard with calls.
* May 13: FBI and Securities and Exchange Commission officials allege First Pension used a massive pyramid scheme to defraud investors out of an estimated $121.5 million.
* May 26: Preliminary injunction requested by the SEC is issued to freeze First Pension’s assets along with assets of its three principals.
* May 31: About 150 angry investors pack federal bankruptcy court in Santa Ana. Court-appointed receiver for Summit Trust tells investors only about 30% of investor funds are accounted for.
* June 1: Investigators say principals Cooper, Jensen and Robert E. Lindley have signed agreements to cooperate with the U.S. attorney’s office in Los Angeles while also agreeing to plead guilty to as-yet-unspecified fraud charges.
* June 10: SEC officials ask a federal judge to jail Cooper, Jensen and Lindley for contempt of court for refusing to turn over financial records under a court order.
* June 28: CommerceBancorp in Newport Beach postpones a stock offering that would have brought in desperately needed capital, citing liability concerns over its past business dealings with First Pension. The bank is later closed by regulators.
* July 7: Investor group files a class-action suit against First Pension in a Santa Ana court, hoping to regain some of the money lost in dealings with failed pension management firm.
* Aug. 1: Cooper, Lindley and Jensen plead guilty to two counts each of mail fraud; could face 10 years in prison and $500,000 in fines.
Source: Times reports
Researched by JANICE L. JONES / Los Angeles Times