Risks catch up with lenders
Reimers guilty in investor scheme: Executive faces up
to 140 years in prison after admitting that he swindled
victims out of $7 million to finance lavish lifestyle
An East Bay investment executive pleaded guilty Friday
to multiple federal charges stemming from a plan that he
orchestrated to swindle individual investors and school
districts out of millions of dollars.
Francis "Bill" Reimers pleaded guilty in federal
court in San Francisco to seven counts, including mail fraud
and money laundering. Reimers, 62, faces up to 140 years
in jail. Each count carries a maximum prison term of 20
years. Sentencing is scheduled for Aug. 3.
As part of his guilty plea, Reimers admitted that he siphoned
cash from individual investors who entrusted their funds
in the financial markets to him. He used that money to bolster
two companies that he established to handle retirement funds
for school district workers and pension money for federal
government employees. Reimers also admitted that he used
profits from those two companies to pay dividends or to
cash out the accounts of individual investors.
Reimers admitted that he used the money he obtained from
the individual investors to bankroll a lifestyle that dazzled
his neighbors, friends, employees and customers.
"He used his clients' money to pay his mortgage and
to buy luxury cars, vacations, and hunting trips,"
the U.S. Justice Department stated in a release.
Reimers had a taste for driving power boats on Lake Tahoe
and hunting doves in Paraguay. He drove home a new Mercedes
SUV every year. His travel itinerary included London, Paris,
Scotland, Ireland and Canada.
"I see this as a tragedy for everyone involved,"
said Alan Dressler, a San Francisco-based attorney who represents
Reimers.
William McHale, one of the individual investors bilked
by Reimers, said he was pleased with the guilty plea.
"How do you spell 'yahoo'?" McHale said. "I
am thankful that Reimers did not put us through additional
months of trial. I hope to never see him out of jail again."
According to prosecutors, Reimers told investors that he
had developed a special "regression analysis"
that could predict when mutual fund values would rise or
fall.
Reimers promised investors that they would harvest at least
a 9 percent annual return.
To keep the ball rolling, Reimers could send clients fictitious
statements that reflected how well their investments were
doing. Even during the bear market that savaged stocks,
Reimers falsely reported that his portfolios were holding
or gaining value.
"This apparent success despite the market setback
resulted in more referrals to Mr. Reimers," the Justice
Department stated.
Reimers admitted to causing losses for more than 250 victims
that totaled more than $7 million. However, the investors
believe they and the school districts collectively lost
at least $13 million, including at least $10 million lost
by individuals.
The former executive has not been jailed as the case was
pending.
"Given the history of the case and Mr. Reimers' cooperation
with the court and the bankruptcy trustee, the court decided
bail was not necessary," Dressler said.
McHale said he believes Reimers tucked away millions that
he drained from individuals and schools systems.
More than a year has passed since the money vanished.
McHale, a former Alamo resident who now lives in New Mexico,
said the pain from his financial and personal losses persists.
"We're not nearly as bad off as the other investors
who lost literally every penny," McHale said. "Some
of Reimers' victims don't know where their next meal is
coming from."
