Court OKs Evenhanded Split of Swindler’s Assets

Cities from Orange County to Iowa that were bilked out of more than $100 million by convicted swindler Steven D. Wymer can collect proportionate shares of any proceeds from the sales of Wymer assets, a federal appeals court ruled Tuesday.

The U.S. 9th Circuit Court of Appeals rejected an effort by a Palm Desert agency to get a bigger chunk of the proceeds.

Wymer had built a reputation as a manager of municipal funds, and cities such as Orange, Torrance and a group of Iowa municipalities had invested millions of dollars with him.

But Wymer had built a Ponzi scheme, using money from newer investors to pay interest to earlier ones, and a large portion went to satisfy his taste for luxury and high living.

The Palm Desert Redevelopment Agency had traced some of its funds to a vacation home Wymer had bought in Idaho and sought to recover all the proceeds from its sale by the government. But the appellate court agreed with the lower court’s assessment that Wymer had commingled funds and that the agency couldn’t show that only its money was used.

Besides, both courts said, all victims should be treated equally in such a massive scheme where there are insufficient funds recovered.

Wymer pleaded guilty in 1992 to nine counts of racketeering, securities fraud, mail fraud, bank fraud and obstruction of justice in what federal officials said then was “one of the most significant and financially devastating cases of securities fraud ever perpetrated on American citizens and investors.”

He is serving a prison term of 14 years, seven months.