Wymer OK From Wyoming Denied : Scandal: If the Newport Beach manager set up an account tied to trust fund, ‘it was without our knowledge,’ state official says. Trial enters third day.

A Wyoming official denied allegations that the state authorized former money manager Steven D. Wymer of Newport Beach to set up an account linked with the Iowa Trust Fund lawsuit.

“If he set up an account, it was without our knowledge or approval,� Wyoming Deputy Treasurer Glenn Shaffer said. “He didn’t invest any of our money. We didn’t lose any money.�

Wymer, who has been free on bail while awaiting trial on federal criminal charges that he defrauded more than a dozen clients, ran three Irvine-based companies: Institutional Trust Management, Denman & Co. and Fund Administration Services.

The companies allegedly diverted millions of dollars from the accounts of local governments and savings institutions in California, 12 other states and Micronesia.

Iowa Trust has alleged that Wymer illegally set up a dummy account in Wyoming’s name that was used in a scheme to defraud it of about $40 million. The trust said the money was then given to Jefferson Bank & Trust of Lakewood, Colo.

Jefferson Bank maintains that the $40 million sought by Iowa Trust was earned through separate securities trades.

Iowa Trust has sued Jefferson Bank in a bid to gain control of the contested money. The U.S.District Court trial on the suit entered its third day today.

The trial is sure to become one of many court proceedings around the country arising from the Wymer affair. In Orange County, the city of Orange has filed suit against Wymer, the New York brokerage where he traded and an employee of that brokerage. The city alleges in the lawsuit that the employee, Kimberly Goodman of Refco Securities Inc., tried to defraud the city of $7 million.

Orange is one of 10 Southland cities that believe that they have collectively lost $45 million through Wymer-controlled investments.

In the Iowa Trust case Tuesday, Boulder securities analyst Gary Biesiadecki testified that he spent more than 120 hours trying to trace the complex securities trades to find the $43 million that Iowa Trust says it is owed.

He said it appears that Wymer set up a dummy account for Wyoming, which was used in the shuffle of the Iowa Trust money. He also said Wyoming paid $187,000 in commissions as part of the transactions.

Shaffer said Wymer had advised the state informally on investments since 1989, but the state never paid Wymer.

Shaffer also said the state decided against becoming a client of Wymer because his company had not been in business for 10 years.

Biesiadecki speculated during his testimony that Wymer engaged in fraudulent securities trades because he had received a percentage of performance on accounts he managed.

He also said that one of Wymer’s partners had part-ownership in Jefferson Bank and that the partner and Wymer would benefit if the bank appeared profitable.

Iowa Trust collapsed Dec. 11 after the Securities and Exchange Commission seized Wymer’s companies. The trust had pooled money from more than 80 Iowa cities, counties and government agencies for investment with ITM.

In its lawsuit, Iowa Trust alleges that Wymer made a series of complex wire transfers in a matter of hours on Nov. 25 that put its $43 million in Jefferson Bank’s account.

Jefferson Bank contends that the contested money actually came from a different series of transactions.

The trust won a preliminary injunction in January that froze $43.1 million of the bank’s assets, pending the trial’s outcome.

Iowa Trust attorney Walter Garnsey said Monday that the fund’s money was transferred illegally to Jefferson Bank & Trust by Wymer for the alleged securities kiting scam.