First Pension Co-Founder Looks Back, Accepts Some Blame : Profile: William E. Cooper also points to others in lengthy fraud. To make amends, he wants to help identify similar scams.

With an impish smile and a Boy Scout pin fastened to his tie, the William E. Cooper pictured in Bellflower High School’s 1961 yearbook looked like the kind of guy who would guide an elderly woman across a busy street--not grow up to steal her life’s savings.

But Thursday, Cooper, now 51, was sentenced to 10 years in a federal prison for defrauding thousands of mostly elderly clients of $136 million.

Along with two partners, Cooper operated First Pension Corp. in Irvine, one of Southern California’s longest-running and most elaborate Ponzi schemes, cheating thousands of customers out of their retirement nest eggs by enticing them to invest in phony mortgages.

Along with his Bellflower High School classmate Robert E. Lindley, 51, of Laguna Niguel and Valerie Jensen, 47, of San Juan Capistrano, Cooper created a scheme that bilked clients out of $73.1 million in direct investments and $63 million in interest, federal prosecutors have said. Investors were persuaded to buy second trust deed mortgages, which the defendants have admitted were phony almost from the start.

During an interview with The Times last week to be published after sentencing, Cooper discussed the operation of his scheme and the extent of his wrongdoings.

“There has not been a day since 1983 that I haven’t struggled with this,” said Cooper, his voice choking. “There were many times we believed we could overcome it. But it was a race we couldn’t catch up with. It’s something you can’t describe in terms of the anguish, the stress, the torment you have to live with every day.”

Sitting in the 50th-floor conference room of his lawyer’s downtown Los Angeles office, with a rainy day view of the Hollywood Hills and glimpse of the Griffith Observatory behind him, Cooper accepted some of the blame for what happened, but also sought to place blame for the fraud to other First Pension officials as well. He apologized to investors, and said that he wants make amends by offering his services to those who investigate fraud schemes throughout Southern California, such as the Securities and Exchange Commission.

From the former dairy fields of Bellflower, Cooper grew up to eventually hobnob with the likes of former Vice President Dan Quayle, former Gov. George Deukmejian and U.S. Congressman Christopher Cox.

Many of his high-powered friends, though he won’t say who, have stuck by him in his dark hours, offering money and letters of support, Cooper said. Besides running his fraud scheme, Cooper was considered an expert campaign fund-raiser, who also found time to travel with his second wife to vacation homes in Maui and Deer Valley, Utah, from his $700,00 home in Villa Park.

Real estate was Cooper’s love, the foundation for his fortunes. Cooper started in the mortgage business when he was only 18, moving on to work for a string of mortgage-related companies.

“I liked the business because it was fast-moving, a new transaction every day. There was lots of interaction with people and it was a very professional business,” he said. “It was easy to master without a formal education.”

He never went on to get a college degree, but after working at a series of firms, Cooper became a master architect who designed companies and limited partnerships all constructed on a foundation of elaborate lies.

Cooper went to such lengths to protect his scam that he hired an actress in 1990 to impersonate a state investigator--who gave his company a clean bill of health--in order to calm increasingly nervous employees, according to court documents.

*

Cooper met his current and former wives in the mortgage business. He has an adult son, Travis, who lives in San Jose and is “still angry,” at him, Cooper said. He and his second wife, Terri, owned a three-bedroom, English-style home in Villa Park’s exclusive Sommerset neighborhood. Cooper said that he is now separated from Terri, who he maintains knew nothing of his fraudulent activities. They have a 5-year-old son, Padon.

Cooper said last week that he never wanted to steal anyone’s money. What he really wanted to be was a builder and civic leader, like his late father, an aerospace worker who had time to run for Bellflower City Council, serve on that city’s Planning Commission and still develop building projects on the side.

“There’s a part of me that’s a builder,” Cooper said. “My father always had some project going on. We built some apartments and we built a ski boat. I liked that.”

Ironically, Cooper did become a builder of sorts--constructing and planning a pyramid scheme in an attempt, he says now, to recoup money for investors.

*

First Pension, which at one time managed accounts valued at $350 million, declared bankruptcy April 22, 1994, one day after Colorado state banking authorities seized Summit Trust Services in Denver, a firm established by Cooper to manage clients’ money. The complicated trail of investor funds stretched to the Cook Islands, Singapore and back, as nearly 8,000 people put their life’s savings into Cooper’s highly marketed company.

U.S. attorneys charged that Cooper and his partners engaged in a scheme to hide the mounting losses at First Pension and diverted clients’ money to pay their own six-figure salaries, make payroll for employees, meet operating expenses and cover losses. Diverted money was also used to invest in new business.

But Cooper describes a successful company that after less than a year in operation began to go wrong in 1983 when a former partner failed to address losses from bad investments and started diverting money from new clients into other ventures and into paying returns to earlier investors.

Instead of shutting down the company, Cooper said that he and the other founders, Lindley and Jensen, decided to form new companies, hoping to make enough money to cover losses that had reached $6 million.

First Pension and the related companies--Vestcorp and First Diversified Financial Services, which was the holding company for First Pension and Vestcorp--then became a classic Ponzi scheme, investigators say, where new investors were brought in to pay off early investors. Eventually, by last April, the 12-year scheme collapsed.

Cooper formed First Pension in 1982 with Glen Belka, who has not been accused of any wrongdoing by federal authorities. Belka, a tax-law specialist, now lives in San Bernardino.

Belka, who did not return repeated phone calls this week, has said earlier that he hadn’t spoken to Cooper in six years and that Cooper was responsible for whatever went wrong.

“Cooper purchased all my interest, and I was terminated in 1985,” Belka said in an interview last year. “All I know about Cooper is that he ran everything, he did everything and he was president of everything. Do I wish I’d never met him? The answer is yes.”

But Cooper, during his interview last week, blamed Belka for the company’s early fraud, saying that Belka began to divert money into bad investments without telling him and refused to pass along losses to investors.

Assistant U.S. Attorney Leslie Swain said in court Jan. 26 that Belka was a “criminal participant” in the fraud, but said Belka would not be charged because of a statute of limitations.

“When reality hit us we had several meetings,” in 1983, said Cooper. “I was astounded the investors hadn’t been advised of the losses. Belka said we were all going to jail, and I believed there was substantial fraud.

“In hindsight, I would have done other things. I would have closed it down,” Cooper said. “But the decision was made to go forward. The four of us believed we could turn it around, form additional businesses, build business to sell and do additional partnerships.”

Cooper said Jensen and Lindley carry equal responsibility for the fraud, calling both of their roles “the same as mine.”

“All . . . of us had an equal role in this,” Cooper said. “Our agreement was that anything earned would be used to fill the hole up and anything left over would be divided up equally.”

*

Cooper said he and his partners were always optimistic and thought they could make money to cover losses for investors. Like losing gamblers at a Las Vegas card table, Cooper and his partners kept thinking they would one day hit the jackpot, return money to investors, keep some for themselves and eventually be winners.

“I worked very hard to build those companies. I thought we could turn them around,” he said.

Conceding that he has given away nearly $1 million in political contributions over the years, Cooper said that investors’ money was never used for such payments, but he wouldn’t explain the source of such contributions.

“Investor money was not going into the political process,” said Cooper. “But the political process, part of that was helping good people be elected to office that could help move society along. And that’s part of my community involvement and desire to help. And that goes back to my father, who was involved in politics in Bellflower.

“It was something we were raised to do--give back,” he said.

Cooper has already paid about $3 million in restitution to investigators, though ownership of two condominiums in Maui and his ski chalet in Utah were transferred to his wife’s name, and then she filed for personal bankruptcy last month.

Now facing 10 years in a Nevada prison, Cooper said he is not sure what he will do next, but has no plans to write a book. He said these days he just feels scared.

“I never wanted to be a Wall Street wizard,” Cooper said. “I wanted to be successful but I think now that success is measured in a lot of ways.”