Women Sue Financiers, Claim Fraud

For nearly three decades, Helen Schlaepfer worked at an Oxnard bank to save enough money for a comfortable retirement in the Tennessee countryside.

On the advice of a banker, she says, she invested the bulk of her life savings--$60,000--in a real estate investment plan that promised high returns but eventually yielded little more than heartache.

“I was just hoping to have some nest egg so that I wouldn’t be totally dependent on Social Security,” she said. “I am now 68 years old and it would be nice to have something.”

Port Hueneme resident Bonnie Williams shares her grief. She says she sunk a $100,000 nest egg into the real estate venture eight years ago and, after a honeymoon of high returns, watched her dividend checks shrink to nothing.

“It took a good part of my lifetime to put that money away and now it’s all gone,” she said. “It has stopped me cold in my tracks. I can’t make any future plans. I had hopes and dreams, but what’s left now? I’ll tell you; if I had to do it over again, I’d just put that money under my mattress.”

The investments turned sour during a time when California real estate prices were falling dramatically. But Schlaepfer and Williams say the blame for their plight does not rest on bad economic times.

On Tuesday, they filed a lawsuit on behalf of 150 Ventura County residents who say they were cheated out of millions of dollars in a fraudulent moneymaking scheme.

The lawsuit contends that two longtime Ventura financiers who managed four partnerships--with investments totaling about $8.5 million--siphoned hundreds of thousands of dollars for their own benefit and then moved out of state.

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The suit also alleges that D. Michael Martin and Richard H. Beguelin denied their investors access to accounting records and misrepresented the value of dozens of real estate holdings.

Because many of the investors were senior citizens who poured their retirement money into the partnerships, the suit also seeks damages under a state law intended to shield the elderly from financial abuse.

Martin, who now lives in Breckenridge, Colo., declined to comment on the lawsuit Tuesday evening. Beguelin, who lives in Austin, Texas, could not be reached for comment.

Ventura attorney Gary Byron Roach, who has represented Beguelin and Martin in the past and is named a defendant in this case, said he had not seen the lawsuit and did not know what action Martin and Beguelin may want to take.

But he did point to a previous judgment in a similar case in Ventura County that cleared his clients of any wrongdoing. Last year, an arbitrator ruled that investment losses occurred because of a substantial drop in the value of California real estate--not because Martin and Beguelin were unfaithful or negligent.

“I think these are the same allegations made by different people, and I don’t think that they are going to go anywhere,” Roach said.

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“I can’t blame them for being upset,” he said of the investors who are suing, “but they sure were gleeful when they were making 18%.”

The investors’ allegations have touched off a probe by the district attorney’s office, which authorized search warrants for bank records related to the partnerships in February.

The Ventura and Oxnard police departments have investigated the case, which is now being handled by the district attorney’s fraud unit, Deputy Dist. Atty. Mark Aveis said.

According to the lawsuit, Martin and Beguelin created, managed and controlled four limited partnerships--CCF Income Fund, Secured High Yield, Cal Vest and Equivest. The purpose of the partnerships was to invest in real estate loans backed by first and second trust deeds on homes around Ventura County, the lawsuit says.

Investors put money into the partnerships, and the money was pooled into a corporation known as Ventura Bancorp, also doing business as Cal Coast Financial, the lawsuit says.

It was out of Ventura Bancorp, the lawsuit alleges, that money was siphoned for the defendants’ personal benefit or used to finance “highly speculative development and construction loans.”

In addition to Martin, Beguelin and Roach, the lawsuit names Ventura Bancorp and its four limited partnerships as defendants. It also names Roland Leonard and his corporation, Whispi Inc. Leonard took over management of two of the limited partnerships last year, the lawsuit says.

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Investors said they were lured by promises of high-interest returns on the loans, which they say were promoted as safe investments that would pay off over a short period of time.

And for years, the investments did exactly that.

A share of Cal Vest yielded 16% to 19% in interest payments in 1990, according to quarterly statements mailed to the limited partners.

In the years that followed, however, the dividend checks started getting smaller. Martin and Beguelin attributed the lower yields to the real estate slump of the early 1990s and legal expenses stemming from a 1992 lawsuit with a limited partner, according to the statements.

But the lawsuit filed Tuesday contends that the returns were low because the financiers mismanaged the partnerships and made bad loans.

“We are not talking about falling real estate values, we are talking about out-and-out fraud and theft,” said Gregory J. Ramirez, an Oxnard attorney representing the two women.

Ramirez said he once invested $10,000 with Ventura Bancorp while in law school nearly a decade ago on the advice of his father-in-law, Richard Acquisto. Upon graduating, Ramirez added, he asked for his money back and got it.

But his in-laws were not as fortunate, Ramirez said.

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Richard and Wanda Acquisto said they poured their life savings into the investment plan, a total of $665,000. And that’s not all. The Oak View couple formed a close relationship with Martin over the years, exchanging Christmas gifts with the investor and counting him among their best friends.

“I didn’t jump right in; I’ve always been cautious,” said Richard Acquisto, 66. “I tried to find something wrong with this deal from the beginning, but I had no reason to suspect that anything was wrong until it all came crumbling down.”

After an initial investment of $50,000 in 1983, the Acquistos said they slowly plunged their savings into the partnerships over a period of about eight years.

At first, it was just money they had saved from their jobs. He worked in auto sales for 25 years, and she worked as a bank teller and later in the auditor’s office for the county.

Eventually, with their money generating more than $100,000 in some years, they even sold off property they owned and put the proceeds into the investment.

But by the early 1990s, they say, their annual return had fallen to about $20,000. In 1994, it was $5,600. They say they have not received any income since then.

“I was just in shock. I just did not want to accept the fact that this was happening,” Acquisto said of the slow realization two years ago that his investment had gone belly up.

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The Acquistos said they have put their Ojai Valley home up for sale, a house they built 15 years ago and which they now hope generates enough money to keep them afloat until they can recoup some of their losses.

“That was to be our retirement and one day to help our grandchildren through college,” said Wanda Acquisto, 61, who can barely think of the loss now without bursting into tears.

“It can’t all just be gone,” she added. “It’s our whole life.”

The Acquistos’ daughter, Linda, who was also an investor, was the first one in the family to question the investments. She asked her accountant, Kenneth Creal, to look into the matter, and together they went to the partnership office to review the records in May 1994.

What they found, Creal said, was startling.

“I was shocked and appalled,” said Creal, alleging that he saw evidence of limited partners’ investments being used to pay their interest payments. “It is heartbreaking to see senior citizens taken advantage of when they have no opportunity to go out again and re-earn what they needed to retire on.”

The 35-page lawsuit filed Tuesday in Ventura County Superior Court is the third filed against Martin and Beguelin over the failed investments.

After the financiers sued an investor for slander in 1992, the man and another investor countersued. Court records show that an arbitration judgment was handed down last year and no damages were assigned.

Last year, the Acquistos sued and Ramirez said he will ask that their case be consolidated with the lawsuit filed by Schlaepfer and Williams. Ramirez said the suit will probably be tied up in the courts for at least a year.

In the meantime, many investors say they are left struggling with a staggering loss that strikes a deep, painful chord because they knew the financiers personally.

Santa Paula resident Don Paillette, 68, was close friends with Beguelin, having been involved in a previous limited partnership with him years earlier.

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So when Beguelin pitched him his moneymaking plan in 1987 as a safe place for his retirement money, Paillette said he had full faith that the investment would pay off. The retired Ventura College history teacher said he invested $70,000 in the plan and has received less than $10,000 in return.

“I feel betrayed, totally betrayed,” said Paillette, noting that he and Beguelin are no longer on speaking terms. “That is one of the reasons it makes it an especially bitter, bitter pill for me to swallow.”

Ventura retiree Stan Weisel, 69, also feels betrayed.

The former community college math teacher invested $310,000 in a limited partnership over a three-year period. Despite pulling $100,000 out of the fund in 1991, he says he has lost tens of thousands of dollars on the deal.

Weisel said he and other investors are now stuck with vast acres of raw land and $750,000 in back property taxes as a result of development loans that turned sour.

Standing on 12 acres of weed-choked canyon land near Camarillo last week, Weisel shook his head and wondered what went wrong.

“They said the majority of our loans would be single-family dwellings,” he said. “I had no idea that they had gotten involved in these things.

“I trusted them,” he added. “We all trusted them.”