Jeff and Patty Miller have lost most of their retirement savings in a scam that sucked in 2,600 people from coast to coast.
The Corona couple had three accounts with Orange County-based Financial Advisory Consultants Inc., a company federal officials allege was a Ponzi scheme, an investment program that paid previous investments with money enticed from new clients.
The owner of the company, James P. Lewis Jr., was arrested in January and faces mail-fraud and money-laundering charges. A receiver has been appointed by a judge to sort through Lewis’ assets and see what can be liquidated and returned to investors.
The court-ordered receiver has scheduled a meeting of former investors for April 3 from 1 to 4 p.m. at the Army National Guard Joint Training base, 4411 Yorktown Ave., Building 6, in Los Alamitos. It’s a meeting the Millers have marked on their calendar.
“The fund was looking so good I thought I could retire when I turned 57,” said Jeff Miller, the 52-year-old senior pastor at Mission Community Foursquare Gospel Church in downtown Riverside.
The come-on, Miller said, was an annual return on investment ranging from 18 percent to 43 percent. The plan was so enticing that Miller invested his entire $70,000 pension from the church and another $25,000 from the sale of a home.
Patty Miller rolled her $3,500 Individual Retirement Account into another account, he said.
The Millers and other Inland residents joined the scheme through a word-of-mouth campaign that relied on friends trusting friends – what the government calls an “affinity scheme.”
“The only way to get into this investment was to be referred by another person,” said Miller.
Miller bought into the idea while he was working in Foursquare’s southwest district office in Corona, an office that is now closed. Another pastor gave him a brochure. It looked good, so he invested.
And it seemed to be paying off. Miller said he drew money out of his accounts three times, and the couple’s earning statements showed their original investments were growing rapidly.
“I thought, wow, this is a great investment,” he said.
But red flags when up for the Millers when they found out that new investors to the fund with the highest return had to make an initial deposit of $100,000 instead of the $25,000 required when Miller bought in.
At that point, Miller pulled out $10,000.
Now he simply hopes he and his wife can recoup their original investment. While at the church’s district office, Miller said he gave one of the investments brochures to his colleague, Don Long.
Long also sunk money into the pyramid scheme, according David Robinson, a Los Angeles attorney who represents Long’s wife, Luann, who lives in Riverside. After Long died in an automobile accident in 2003, Luann Long invested her husband’s life insurance with Lewis, said Robinson.
Long could not be reached for comment Thursday. She is trying to recoup $1.8 million she invested, said Robinson.
“I have eight clients in the Inland Empire, and I think I’ve just hit the tip of the iceberg,” said Robinson.
He characterized most of his clients as women or elderly people. One of his retired clients had to take a sales job in a tire store to survive, he said.
The International Church of the Foursquare Gospel also lost money. Ron Williams, spokesman for the organization, said the church’s lawyers working with authorities to recover $14 million it invested in this and another Ponzi scheme over 18 months.
According to estimates in court records, Financial Advisory Consultants owes investors about $169.5 million. The company was in business for more than 20 years before the Securities and Exchange Commission shut it down in December and froze Lewis’ assets.
Receiver Robb Evans told investors in a letter dated March 10 that there probably wouldn’t be much new information on the Lewis case at the April 3 meeting that was not in his March 8 report to the court on Lewis’ assets. Evans discouraged investors from traveling long distances to attend the meeting.
“Right now the identification of his assets are far short of paying off the investors’ liabilities,” said Kenton Johnson, a deputy in Evans’ office. “But the receiver is following up to see what else can be done.”
Johnson said that Evans’ preliminary report indicates that Lewis spent some $58 million of investors’ cash, including some $13 million in businesses that never generated any return and $20 million lost playing the foreign exchange and commodities markets.
He also transferred more than $8 million to two girlfriends and has another $5 million tied up with family members, according to documents.
Lewis owns or co-owns several expensive homes, and three are co-owned by Lewis’ estranged wife, Sally, and the two girlfriends. Lewis and his wife also own a luxury home in Palm Desert valued at around $810,000 and an $850,000 rental property in San Diego, according to court records.
Lewis’ wife has not been cooperative in getting the real estate they jointly own liquidated, according to the receiver’s report.
But Johnson said he’s confident the homes will eventually be liquidated.
“Especially in this economy, the recovered real estate will help us get good resolution,” Johnson said.
FBI agents in Houston arrested Lewis on Jan. 22 on five counts of mail fraud and nine counts of money laundering. He had some $20,000 in cash on him and more than 20 credit cards, along with a map with routes to Mexico highlighted.