Real Estate Official Pleads Guilty in Ponzi Scheme

Stanley Glickman, a principal in one of the San Fernando Valley’s biggest real estate Ponzi schemes, has pleaded guilty to 17 felony counts in a case involving more than $1.2 million in losses to investors, the district attorney’s office said Thursday.

Glickman and his father-in-law, Elliot Fine, from 1970 to the early 1990s ran Property Mortgage Co. in Sherman Oaks. The company lured more than 1,000 retirees and other well-heeled investors by paying up to 15% interest in what seemed like safe investments, primarily in second mortgages.

But when the Valley’s real estate market nose dived in the late 1980s, Glickman and Fine, who died in 1995, started taking cash from new investors to pay off interest owed old investors in what is known as a Ponzi scheme, said Brent Collier, an assistant district attorney who prosecuted the case.

Collier said that in the end there wasn’t enough money to keep the company going. On Valentine’s Day 1991, the company ran out of cash, leaving hundreds of angry investors unable to get their money as the company collapsed into bankruptcy.

Many victims lost their life savings.

Glickman, who lives near Palm Springs, pleaded guilty Tuesday to six counts of grand theft, six counts of corporate securities fraud and five counts of selling unregistered securities, with the victims’ losses in those specific cases totaling more than $1.2 million, Collier said.

Glickman will be sentenced in September. He faces up to 10 years in prison.

Glickman is not related to well-known Valley real estate agent Mike Glickman.

*

Gerald Chaleff, Stanley Glickman’s attorney, said it was in the best interest of his client to accept a plea bargain because the case had gone on long enough. But Chaleff contends that Glickman did not run a Ponzi scheme.

“This was always a legitimate business . . . part of the problem was a failing real estate market,” Chaleff said. “Stan Glickman was investing money in the company when it was on the brink of collapse.”

Collier agreed that for years the company had operated as a legitimate business, mailing out like clockwork its monthly interest payments to investors.

Todd Neilson, a bankruptcy trustee for Property Mortgage, said some 1,000 investors lost nearly $100 million in the company due to a mix of bad real estate investments and the Ponzi scheme.

If Glickman and Fine “had done the honorable thing and stopped taking in new money, they could have paid back investors 70 cents to 80 cents on the dollar,” Neilson said.

Instead, after years of litigation, the average Property Mortgage investor got back only 35% of his or her money, he said. “Many lost their life savings. That’s what is so heinous about this,” Neilson said.

Donald Pinsker, an investor who said he lost $180,000 with Property Mortgage, was not impressed that Glickman could face 10 years in prison.

“What a short period of time for screwing up the lives of hundreds of people,” Pinsker said.

Pinsker, 61, is a Sherman Oaks resident who works as a television engineer at CBS. In 1989, on the advice of a friend who was happy with the returns from Property Mortgage, Pinsker invested $197,000, money he expected to live on during his retirement.

He’s lost almost all that money.

“I am a maven of thrift shops. I know where to find shirts and pants in all the local thrift shops. I haven’t bought anything new in years,” he said. “Now I’ve got 10 years to earn enough to live on the next 30 years.”

Fine and Glickman set up Property Mortgage in 1970, and word of mouth kept luring new investors. The company acted as a mortgage broker and lent cash to various buyers of residential and commercial properties.

For years, Property Mortgage sent out holiday boxes of See’s candies to each investor, along with its newsletter.

*

One Property Mortgage newsletter told investors that the company was keeping a watchful eye on their loan portfolios: “We’re comfortable and we certainly hope that you, our investors, are comfortable continuing to invest your confidence in us,” the newsletter read.

“Glickman was considered to be the brains by his father-in-law. But Glickman was not brilliant. He made a lot of terrible investments,” Collier said.

Two of Elliot Fine’s sons also played a role at the company.

Jeffrey Fine, a former salesman at Property Mortgage, pleaded guilty to five felony counts in the case three weeks ago, Collier said, and he faces up to seven years in prison.

Michael White, Jeffrey Fine’s attorney, said his client’s “involvement was minimal” at the company and he is “very anxious to go on with his life.”

Steven Fine, who lives in Costa Rica, is expected to plead guilty to two felony counts in June, Collier said.