WASHINGTON -- Federal prosecutors are expected to announce a settlement today or criminal and civil charges against Steven Wymer, the California money manager who allegedly defrauded municipalities nationwide out of roughly $100 million, a knowledgeable source said.
The Securities and Exchange Commission and the U.S. attorney's office in Los Angeles will hold a joint news conference at 11 a.m., Pacific daylight time, to outline the agreement with Mr. Wymer, the head of the now-defunct Institutional Treasury Management, the source said.
The details of the settlement are not known, but are expected to include SEC penalties against Mr. Wymer and require the firm to disgorge, or give back, illegal gains.
Government lawyers have charged that the Newport Beach, Calif., adviser gave dozens of towns and counties inflated reports of their securities or investment holdings by illegally shifting those clients' funds from account to account.
The move is the latest in a series of actions by the SEC and U.S. attorney's office that began Dec. 9 when the commission filed in federal court for a temporary restraining order to block Mr. Wymer from further investment activities and to have a receiver appointed to sift through the firm's finances.
The restraining order was granted Dec. 11, the firm was permanently barred from further illegal activities Feb. 7, and criminal action was initiated Dec. 18, when Mr. Wymer was arrested at his Newport Beach, Calif., home.
A federal grand jury on Jan. 22 returned a 30-count indictment charging Mr. Wymer with securities fraud, money laundering, obstruction of justice, and mail fraud.
The SEC on April 27 revoked Mr. Wymer's investment adviser license and barred him from the securities business June 16 based on charges which were neither admitted or denied by Mr. Wymer.
Among Mr. Wymer's clients was the Iowa Trust, which consists of 88 communities that pooled their cash in an investment account handled by Institutional Treasury Management. The SEC charged the firm with fraud after determining that $76 million was missing from the trust's account.
The Iowa attorney's general's office has filed suit to recover the money from various banks in Colorado and California where Institutional Treasury Management had accounts. The office so far has recovered $43 million from Jefferson Bank & Trust in Lakewood, Colo.
However, a federal judge placed the funds in escrow until the bank can complete its appeal. In July, the federal appeals court in Denver granted a request by Iowa Trust attorneys to expedite the appeal of the decision, which is expected in January or February.
In addition, the Iowa Trust in September sued Steen Ronlov, an associate of Mr. Wymer, alleging that both men used Iowa Trust funds to generate profits of $525,000 with a secret investment account. Mr. Wymer was not named in the suit because the attorney general's office determined that Mr. Ronlov was the "primary player" in the fraud.
Mr. Ronlov, a Denver resident, operated a company called ITM Marketing that performed marketing duties for Institutional Treasury Management. He was instrumental in establishing the investment management relationship between the Iowa Trust and Institutional Treasury Management in January 1990.
So far, only Marshalltown, Iowa, has been downgraded because of the Iowa Trust scandal. Moody's Investors Service downgraded its bonds to A from Aa in February.
Earlier this summer, the Iowa Finance Authority sold $12.1 million of unrated revenue bonds to tide over seven localities hit by the Iowa Trust scandal.