La Quinta Settles Suit Over Funds Handled by Wymer : Litigation: Action clears the way for city to pursue those who helped Newport money manager in fraud.
LA QUINTA — Mayor John J. Pena said Wednesday that the city of La Quinta has collected $8.7 million in settling a lawsuit over funds it withdrew from accounts held by convicted Newport Beach money manager Steven D. Wymer.
The city, which withdrew $10.7 million from Wymer’s control just before his investment scheme collapsed in late 1991, agreed to turn $2 million over to a consortium of Iowa municipalities and public entities that had also invested with Wymer.
The consortium, known as the Iowa Trust, will also receive the first $500,000 of any money La Quinta recovers from third parties the city is suing and will share 50-50 in any recovery over that amount.
The settlement clears the way for the city, which lost $14.2 million, and the Iowa Trust, which lost $87 million, to pursue those who helped Wymer defraud dozens of California, Colorado and Iowa cities and public entities of more than $100 million.
The settlement also eliminates costly attorney fees the city was incurring in defending the Iowa Trust suit, Pena said.
Wymer is serving a 14 1/2-year prison term after pleading guilty last fall to 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.â€
Wymer, 44, managed up to $1.2 billion in investments for 64 clients, mainly government entities, though investigators aren’t sure he had that much money under his control. Among those defrauded were the cities of Orange, Torrance, Palm Desert and La Quinta. Orange wrote off $7 million, calling it a potential loss.
Wymer’s operation was shown in court to be a Ponzi scheme, as he took money from more recent clients to pay off earlier investors. E. Kurt Yeager, a Newport Beach lawyer for La Quinta, said the trust had contended that La Quinta took money that Wymer had obtained from the trust.
Meanwhile, Wymer led a lavish lifestyle. During his free-spending days in the 1980s, first as Denlan & Co. and then as Institutional Treasury Management, Wymer collected four pricey properties in Newport Beach and tony homes in Idaho, New York and Palm Beach, Fla., as well as fine art, boats and 10 luxury cars.
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