Dozens of Iowa cities defrauded by Newport Beach investment adviser Steven D. Wymer said Tuesday that they won a big victory when a federal appeals court agreed that $44 million in a Colorado bank belonged to them.
Wymer pleaded guilty in September to defrauding cities in Iowa and California of what prosecutors said was $105 million. He is to be sentenced in Los Angeles next week. Wymer has admitted not only taking clients' money for personal use, but also to shifting money from one client to another to hide his investment losses.
Meanwhile, his clients have been feuding over what remains of the money. The Iowa Trust, which invested the cities' money through Wymer, was the biggest loser: It was out $75 million when the fraud was discovered in late 1991.
Of that, $44 million landed at Jefferson Bank & Trust in Lakewood, Colo., in what the Iowa attorney general says was "a complicated set of financial transactions engineered" by Wymer.
The bank said it would close if the funds were returned to Iowa. Nevertheless, Iowa won an earlier federal court suit; it was that ruling that the federal appeals court in Colorado just upheld.
With $17 million the Iowa Trust recovered earlier, the additional $44 million means that the trust has retrieved $61 million of the $75 million it is missing.
The trust is also suing the California desert cities of Palm Desert, Indio and La Quinta for millions of dollars it says Wymer transferred fraudulently from the trust's accounts to those cities' accounts.
A trial, it says, is set for July.