|By Kevin McCallum, The Press Democrat, Santa Rosa, Calif.|
Had he lived, Stephens could have faced fraud charges over the collapse of his Novato company, an attorney representing Stephens' company told stunned investors last week, according to several people who attended the meeting.
The disclosure has left investors feeling betrayed by a man who gave every outward appearance of being a successful businessman, upstanding family man and committed philanthropist. Stephens was active in the
What no one appeared to have known, however, was that at the time of his death of a heart attack
"There is no doubt in my mind that if
Ptucha invested his own retirement savings with Stephens and now hopes to receive just 15 to
"I just felt Clay was a very upstanding guy that I felt I could really trust," Ptucha said. "We all got snookered."
After learning of problems at his company shortly after his death, Stephens' family hired an attorney and quietly canceled a planned public memorial at Cardinal Newman. The family is devastated by the revelations and had "absolutely no knowledge of any wrongdoing until it came to light" after his death, attorney
"The family is in shock and disbelief and feels extremely betrayed, and at the same time is struggling to mourn
Two of Stephens' sons lost a total of more than
"His wife, Anne, is left with a sense of bewilderment, betrayal and anxiety about her future," Palmer wrote. "At the same time, she is sad and worried for many of her friends who lost money."
The company worked with such well-known local firms as Frank Howard Allen Realtors,
Around 2000, Stephens decided that instead of brokering deals for other lenders, he would finance some leases himself, establishing a subsidiary called Warren Equipment Finance.
To raise the capital to fund those leases, he offered friends and associates the promise of a healthy return on their money — one investor said returns ranged between 8.5 percent and 10.25 percent quarterly, depending on the term of the note. The investments were supposedly secure because the leases were backed by the physical equipment which could be repossessed in the event the business stopped making the lease payments, according to those familiar with the company.
But instead of a diverse portfolio of lucrative equipment leases, it now appears the handsome investment returns being paid to investors were being funded by new investors, according to several people who attended a presentation for investors in
Many noteholders have been receiving quarterly payments for years, and when those are taken into consideration, the net losses to investors' principal are estimated to be about
How those losses are divvied up will largely be up to
An investors committee is being formed and is expected to get a report next month. The aim of the receiver is to find, preserve and equitably distribute as much money as possible to investors.
Despite its small size,
According to people at Thursday's presentation,
Business and community leaders expressed surprise at the allegations Tuesday.
"This is a guy I trusted like a grandpa," Lovett said. "It was really a huge loss for me."
Stephens and others in the company were experienced, professional, responsive and seemed genuinely interested in steering him toward business and financial resources that would help the company succeed, Lovett said.
Cardinal Newman Principal
"That would be more than stunning," he said.
Stephens created the Millicent Stephens scholarship fund, named after his first wife, who died of cancer in 1981. The fund paid about
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