First Pension Founder Gets 10-Year Sentence for Fraud

LOS ANGELES — Citing the “enormity of fraud” at an Orange County investment firm that cheated thousands of elderly clients out of pension money, a federal judge Thursday sentenced founder William E. Cooper to 10 years in prison and ordered him to repay $73.1 million.

Cooper, 51, has admitted that he swindled investors out of more than $136 million in retirement savings through his now-defunct First Pension Corp. in Irvine, which once managed accounts valued at nearly $350 million.

“Mr. Cooper crossed the line that separates legal from criminal behavior back in 1983,” U.S. District Judge John G. Davies said after handing down the sentence. “And he persisted in that behavior until the end. The result was the diversion of massive amounts of money, some which was paid generously to Mr. Cooper.”

In August, Cooper and his fellow First Pension operators, Valerie Jensen, 47, and Robert E. Lindley, 51, admitted that they operated an elaborate Ponzi scheme that misled clients into investing in nonexistent mortgages and took money from new investors to make payments to earlier ones.

Lindley, a certified public accountant, was sentenced to nine years in prison Thursday for his role in the scheme and ordered, together with Cooper, to repay the $73.1 million--the amount investors put into the mortgage investments.

Lawyers for both men signaled that they may appeal the decision. Jensen is scheduled to be sentenced March 8.

Calling Cooper the organizer and leader of the First Pension scheme, Davies said he gave Cooper the maximum term allowed under his plea-bargain agreement with the federal government because Cooper “has failed to meet all his obligations under the plea agreement.” Davies said that under the sentencing guidelines, Cooper’s crimes could have sent him to jail for more than 15 years.

Though Copper turned over about $3 million of personal assets to prosecutors, the judge said he had refused to relinquish his $700,000 home in Villa Park and two condominiums in Maui. Cooper instead transferred title to those properties to his wife, Terri, who recently filed for bankruptcy, Davies said.

Cooper sat impassively as the verdict was announced. Just before the sentencing, Cooper had apologized for his crimes, telling the court that he kept the fraud going only because he thought he could recover losses for investors.

“I’m very sorry for what has happened. I’m sorry for the incredible losses and devastation that I’ve brought about,” said Cooper, his voice cracking as he fought back tears. “I can’t describe to you the incredible anguish that I’m suffering. There isn’t a day that goes by that I don’t struggle with what I’ve done.”

Lindley told the judge that he, too, was sorry for his actions. “I only wish I had the strength of character to stop it in the beginning. I didn’t and I was wrong,” he said.

Davies said he had received more than 80 letters from investors, whom he described as mostly elderly people of modest means, recounting tales of suffering because of the First Pension scam.

“The trail of damage is wide,” the judge said.

Joseph and Karmele Murray said they lost $120,000 invested with First Pension and drove nearly three hours from San Jacinto to witness Cooper’s sentencing. Although they said they felt better knowing Cooper would go to jail, the retirees believe 10 years is not enough prison time.

“Any other robbery and he’d be led away in handcuffs,” Joseph Murray said. “They’ve tried to portray him as a good guy. It’s horrible.”

Davies ordered Cooper to report to prison on March 20 and said he would recommend that Cooper and Lindley serve time together in a Nellis Air Force Base federal prison camp, a minimum-security facility in Nevada.

“With what they did they should get the maximum,” said former First Pension employee Gail Johnson. “I’m still very angry about what they did to all of us. I haven’t been able to get a new job.”

First Pension, which had an estimated 8,000 clients, filed for bankruptcy protection April 22, 1994. Company officials were charged the next month by the Securities and Exchange Commission.

Assistant U.S. Attorney Leslie Swain said Thursday that she was pleased that Davies gave Cooper the maximum prison sentence.

“Justice was done,” she said. “The judge had a lot of complex issues to look over in deciding these sentences. I think he balanced the factors and came to the correct decision.”

Lindley’s attorney, Russell Hayman, had argued that Lindley should get a reduced term because, as chief financial officer, he was a “follower” of Cooper, with whom he attended grade school and high school. Hayman said Lindley acted on a “misplaced sense of loyalty and trust.”

* COOPER LOOKS BACK: Company founder accepts some blame, points to others. D1