For three years, through a labyrinth of convoluted financial records that seemed to make little sense, Dan Lang and Al Kaufer tracked the man who they believed had cheated them.
Their odyssey through Stanley S. Sirotin's business dealings in Pasadena was confusing, and at times surreal. They learned of hidden bank accounts in Switzerland, France and England, and of offshore corporations. And eventually they began to believe that most of the money they and other investors had put into Sirotin's three Pasadena developments never went to the projects. The money, they asserted, had been diverted to foreign bank accounts and dummy corporations and was being used by Sirotin to support his and his wife's extravagant life style.
The state Department of Corporations and the major fraud division of the Los Angeles district attorney's office made the same discoveries in a joint investigation of Sirotin begun two years ago.
And it was through Great Hall Corp., a Panamanian entity with a Paris mailing address and a Swiss bank account, that Deputy Dist. Atty. Tim Browne found part of the evidence he needed to file five felony charges of grand theft against Sirotin and his wife, Beryl, late last month, alleging that the Sirotins embezzled $3.7 million from 34 investors in one of the Pasadena projects.
Checks Most Important
Most important, Browne said in documenting the alleged embezzlements, were checks written by Beryl Sirotin and another official of Sirotin's development company to Great Hall. In three separate transactions, $430,000 was diverted to the Panamanian company, Browne said.
And although Lang and Kaufer shared information with him, Browne said, it was finding documentation of transferred funds by subpoenaing bank records that provided the crucial evidence needed to file embezzlement charges.
Lang and Kaufer said that at times they were frustrated by what appeared to be a slow-moving investigation by state and local authorities. Nonetheless, they said, they are impressed that Browne amassed enough evidence to file charges.
But unraveling the Sirotin case was just as confusing to authorities as it was to Kaufer and Lang, and even more difficult, Browne said. "In court, we have to prove beyond a reasonable doubt" that Sirotin did, in fact, embezzle his investors' funds, Browne said. "I can't just rely on the fact that, hey, things look bad here."
Browne: 'Pretty Involved'
The joint investigation by Browne and the state encompassed hundreds of hours of research, volumes of bank records and fragmented financial documents that one investigator said looked like "someone put a bunch of checks into a bag and shook them all up."
"This one has been pretty involved," Browne said. "When you have a case as complicated as this, no matter what the investors allege, it takes time to piece it all together. It takes a while to go through all this stuff and make sense of it."
Kaufer and Lang also spent hundreds of hours researching Sirotin. Poring over court records, auditor's reports and talking with scores of Sirotin associates, both said there were times when they felt like giving up.
"At times I felt powerless," said Lang, a stock market trader in Encino. "I spent many a weekend in the office, working on this, when I should have been evaluating market trends. I spent hours talking to people, traveling around Pasadena. It detracted from my other work."
But unlike Lang, who said his motivation was a matter of principle as well as trying to recover his investment, Los Angeles attorney Kaufer said his prime motivation was that "I wanted my money back."
Sirotin, 61, was one of the premier developers in Pasadena from 1978 to 1984, when he fled the country, leaving behind one bankrupt development and two other financially troubled projects. He built the Burlington Arcade, Les Bureaux and The Commons, three commercial centers in the downtown area funded mainly by private investors.
16 Limited Partnerships
In Pasadena, Sirotin, who claimed to be a successful entrepreneur with a long list of successful ventures, set up Classic Projects Corp. Through that entity, which was an umbrella company for 16 different limited partnerships, Sirotin raised millions from private investors for his three projects.
Beryl Sirotin, reached by telephone, said last week that she "didn't care to discuss" the allegations.
Two additional charges of violating state corporation codes for failing to register a partnership agreement were also filed against Stanley Sirotin. And together, the seven charges give some hope to the more than 100 investors who say they invested millions with Sirotin and have never been repaid.
"You feel pretty stupid sometimes when you get into an investment and you get hurt," said Lang. "I felt pretty stupid for what happened and I guess that I wanted to vindicate my own intelligence. And part of it was just an attitude of 'I'm not going to let this guy get away with it.' "
Great Hall Role Questioned