Investment Consultant Accused of Fraud

BURBANK — A prominent businesswoman who is the former wife of a retired city fire chief was arrested Tuesday on charges that she defrauded 36 people out of more than $2 million.

Police alleged that between 1987 and 1995 Shirley Reynolds, who has operated a financial planning and investment service in the city for more than 10 years, persuaded clients and friends to put money into what appeared to be legitimate real estate investments and second trust deeds.

But the investments were never made and the promissory notes Reynolds gave the clients were worthless, police said. Investors, some of whom were longtime friends of Reynolds, lost between $55,000 and $680,000 in the deals.

“I’m an 84-year-old lady, and she stole everything that I had,” said Burbank resident Dianne Nevel, who won a $20,000 judgment against Reynolds in Burbank Superior Court this year but has only collected $200 so far.

“All my life I saved my money so I could enjoy myself when I retired. Now there’s just enough left to survive.”

Reynolds, 60, is the former wife of retired Burbank Fire Chief Curtis Reynolds. The couple divorced in 1992, according to court records.

Nevel had gone to Reynolds for tax preparation services for many years, and police say many of the alleged victims also started out as clients. Others were personal friends, and one investor had met Reynolds through a bowling league, said investigator Cheryl Skinner of the Burbank Police Department.

“She was very active in the community, and there was no reason not to trust her,” Skinner said. “She had plaques all over the wall in her offices, and she was friends with a lot of prominent people in the city, and her clients knew that.”

Police were first alerted about alleged improprieties at Reynolds’ Burbank offices in October 1993, when an elderly couple who had invested with Reynolds in a piece of prime Burbank commercial real estate discovered that she had never bought the property. Instead, she had invested their money somewhere else, without their permission, Skinner said.

Police then began a three-year investigation in which they combed through records in Reynolds’ offices, bank records and real estate documents. Police found that in return for their investments, Reynolds gave most of the alleged victims promissory notes that said their money was secured by a second trust deed on an office building that Reynolds owned. But what it did not say was that she had lost the property in foreclosure, Skinner said.

Matthew Marshall, Nevel’s attorney, said he believes Reynolds was operating a “pyramid scheme.”

“It’s a fairly common type of fraud,” Marshall said. “You make a commitment to pay money to people on their investment, and the only way to do that if you’re not generating money yourself is to keep borrowing from other people. It’s an endless cycle.

“What’s really insidious about this situation is you have a person who, by nature of their business, is privy to other people’s financial information and uses that information against them under the guise of trying to help. What’s happened to [Nevel] is pathetic, and she is far from alone in this.”

Reynolds is being held in lieu of $1.2 million bail.