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Wymer Deserves 15- to 20-Year Term, U.S. Says : Fraud: The onetime money manager 'continues to minimize the gravity of his offense,' prosecutors say. Wymer's attorney says there are 'strong arguments' for a lesser sentence.

April 17, 1993|JAMES S. GRANELLI | TIMES STAFF WRITER

LOS ANGELES — Federal prosecutors want onetime Newport Beach money manager Steven D. Wymer to spend 15 to 20 years in prison, according to a government sentencing report.

Wymer was convicted of defrauding a bank and cities in Iowa and California, including some in Orange County, of $105 million.

Prosecutors assert in their report, filed earlier this week in U.S. District Court in Los Angeles, that the once high-rolling Wymer "continues to minimize the gravity of his offense" by characterizing his scheme as the "unfortunate snowballing" of efforts to cover a single loss in 1986.

But, the report states, Wymer's fraud was widespread and hurt many people. With big chunks of their savings wiped out, cities have had to lay off workers, delay needed projects and increase local taxes. Political careers have been destroyed, as was that of a Torrance official who suffered a breakdown and eventually resigned after being placed on a stress-related disability leave, the report says.

In seeking a long prison term, prosecutors adopted the recommendation made earlier by the federal probation office, Assistant U.S. Atty. Jean A. Kawahara said. The recommendation is based on federally mandated guidelines for calculating time to be served.

Wymer is to be sentenced May 4 by U.S. District Judge Richard A. Gadbois Jr.

Wymer's attorney, James D. Riddet of Santa Ana, said Friday that there are "strong arguments" for sentencing his client to "under 10 years" in prison. He said that Wymer has cooperated with federal and state officials, testified before a congressional committee on securities fraud and tried to help his victims recover their money.

But Kawahara said little has resulted from Wymer's cooperation.

Riddet's 121-page sentencing report for his client was filed last month under a seal of confidentiality. But the prosecution's report says the main thrust of the defense argument is that Wymer's sentence should be reduced because following the federal guidelines "overstates the seriousness" of his crime.

Wymer pleaded guilty in September to nine charges 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."

At the same time, he settled a civil action brought by the Securities and Exchange Commission by agreeing to repay $209 million. He turned over $9 million worth of real estate, fine art, cars and boats but is unlikely to ever earn enough to repay even the $105 million that prosecutors say he stole, Kawahara said.

During his free-spending days in the 1980s, with his company called Institutional Treasury Management, Wymer collected four pricey properties in Newport Beach and tony homes in Idaho, New York and Palm Beach County, Fla., as well as 10 luxury automobiles.

By the time authorities shut down his enterprise in 1991, they said, he had siphoned off nearly $12 million to support his lavish lifestyle, used $13.5 million to fund his operation and paid $75 million in bogus profits to hide faked securities transactions. He also lost $66 million in bad securities deals.

The prosecution's sentencing report asserts that no sentence, including one of 188 months to 235 months under federal guidelines, can overstate the seriousness of Wymer's crime.

It details the woes of various cities: the resignation of the Torrance treasurer; 63 workers laid off in Marshalltown, Iowa; the precipitous financial condition of Jefferson Bank & Trust of Colorado.

It also points out that cities are incurring large legal fees in lawsuits against one another over money allegedly switched among city accounts in Wymer's "robbing Peter to pay Paul" scheme. Cities are also suing brokers who did business with Wymer.

The report also alleges that Wymer's "pattern of criminal behavior" extends to a time before the six-year scheme began, saying that he defrauded a former partner of $400,000.

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