Thursday, May 14, 2009

new blog on John Otto

I just started this blog to see if anyone wants to share info on HL Leasing and John Otto

1,106 comments:

  1. I am not sure how to join this blog in term of profile so will use anonymous for now. I have read all the reports available and doubt we will ever see a dime. We were led to financial ruin by Ramirez and Lewis - I haven't heard anything from them yet, and doubt they will cooperate.
    Where do we go from here - we obviously need Govt. or California involvement to try uncover the mess.

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  2. Hi,
    I'm not very technically orineted but I think you can join with your google account (whcih is free and easy to set up). In any event it does appear that we were the victims of fraud but we don't knwo for sure if there is any money to recover at this time. The FBI is investigating but that won't get us any money and trying to get the state of california involved i snot easy and may not do much for us either. I am putting together a group to start legal action as there is nothing else that can be done. I you have an interest in joing the group please leave me your email, or phoen number, and I will contact you.

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  3. I am angry, embarrassed and devastated over this matter. How could we have not seen this?? I have been involved with John Otto and Dan Ramirez for over 18 years...... I introduced friends and family to this nightmare.

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  4. Based on what I have read and heard it sounds like we have two separate groups going after John Otto and HL Leasing. There could be more.

    The first group met via a conference call earlier this week. There is a large amount of investors associated with this group. The lawyers name is Don Fischbach. He is based out of Fresno and has already done some preliminary work. My understanding is the Fischbach group is looking to do the Receivership approach. This method sounds good provided HL Leasing or John Otto's other companies have assets.

    There is a second group which is looking to use Tom McCurnin as the lawyer. He was highly recommended by Leasing News and has experience with ponzi schemes. I know it is impossible for all of us to work together on this but we really need to make sure that any action taken is best for the group. We have all been affected by this terrible situation. The latest update to Leasing News gives a good overview of the different types of litigation.

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  5. John Otto owns Air Fred which is an aviation Charter company out of Palm Springs Airport. If the company sells, it can cover some of the investments.

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  6. It is best to unite behind one attorney and Tom McCurrin has the experience. I do not know if he has
    agreed to represent a group at this
    time. He doesn't need the work.

    If you have had an experience of a family member passing away, you know
    there is a probate procedure where all
    interested parties are called, this does not mean just relatives, but creditors and those with claims.

    It then most likely will jump to many
    avenues, including a legal investigation or investigations by
    several government entities, legal followings, claims by creditors, and the family also has the right to file for a bankruptcy hearing.

    A funeral has not been announced at this time, but certainly there will be no family action until after it.

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  7. I was glad to see this blog. We need to all keep in touch on this. My thought right now is I personally will not recover a dime, small investment 100....not even a year old. I think Kit is right about McCurrin from what I've read.

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  8. Be cautious about paying attorneys at this point. You have already lost enough. Legal advice is important to have, but it is also important not to spend money to have lawyers do the things that the government will do for you anyhow.

    When HL Leasing ends up in bankruptcy court, all other lawsuits against HL Leasing will automatically be stayed (so consider the return on any money you spend paying lawyers to file those other lawsuits). The U.S. Trustee normally will then go after all the assets and put them together for the creditors. As an example, Madoff was put into bankruptcy involuntarily.

    You can click here http://www.usdoj.gov/ust/r17/home.htm for the trustee's page for this http://www.caeb.uscourts.gov/ bankruptcy court. Take a look at http://www.usdoj.gov/ust/r17/guidelines.htm

    Of course, whichever investors do put the company into involuntary bankruptcy may have to advance some money for that work, but that money would normally be preferentially repaid from the bankruptcy before any other dollars go out.

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  9. I worked for very closely with John Otto a few years ago in the Leasing Business. I always "questioned" this part of the business?? I always knew that this was going to happen. I never saw any files and It just didnt add up.

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  10. I AM an absolute SUCKER. Better yet an IDIOT.

    JOHN OTTO= BERNIE MADOFF

    Madoff at least was not a coward and took it like a man.
    Otto killed himself and left his family/associates and ALL of us to deal with this mess.

    Thanks Otto even after death you continue to amaze me.

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  11. Wow it keeps getting better and better....

    http://www.kmph.com/Global/story.asp?S=10366960&nav=menu612_2_1

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  12. I agree that we will probably never see a dime, but I disagree with comments that Ramirez and other principals are without guilt. They were officers of the company and probably suspected that something was not 'right' for a while. They were the ones soliciting our money right up through April; most of us never dealt with John Otto. I hope these people and their families, especially Otto's will suffer the same financial devastation that many of us will be faced with.

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  13. I agree I think Dan Ramirez, Norma Lewis from Fresno and the Otto family in Palm Desert must have known. Dan and Norma both say they have money invested as well but all we have seen is them disappear as well.

    I remember asking Dan many times about the validity of this business, I wish i would have taken the extra step now to have investigated further but when you see people in this business for over 15 years I guess you assume it is legit.

    I guess I wish I wouldn't have gotten involved now but no point now. If these people did know I hope there are criminal charges associated to the rest of the people involved. I am glad to see the FBI is involved.

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  14. The Fresno Bee has the story and is working on it, calling investors, too.They are centering on Andy Fernandez, the CFO of Heritage Pacific Leasing, who also was listed as the agent for service for HL Leasing, Inc. in the Department of Corporation filings. By the way, Air Fred, apparently consists of two planes used for charter...

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  15. Thanks Kit for the information. Has a complete list of investors with their contact information been provided to the Fresno Bee?

    Did John Otto own those planes? I guess I should rephrase. Did HL Leasing investors buy those planes for John Otto?

    Has Mrs. Otto, Andy Fernandez, Dan Ramirez, or Norma Lewis spoken publicly since John killed himself? Hard to believe they would not have some incredible insight. Apparently his daughter knows nothing based on a comment posted to a story on the Desert Sun.

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  16. HL Leasing does not own the planes.

    I doubt that anyone is going to make a public statement at this time. A suicide evidently takes longer than a "regular death" as it must involved an investigation, so a funeral has not be announced.

    While the internet is fast, the legal system has steps they follow that meet their legal priorities, not that
    of the world wide web.

    The priority now should be for a group
    of investors, if not all, to join together as a "committee" and hire someone to represent them as a group. It is not a good idea if there are separate groups, as there will be other groups of interests and the more, not the merrier, as you also get into a scheduling problem of
    having dates that are convenient for all and the communication with all to include all.

    The who did what and who is responsible for what is up to what
    ever the legal community can present in court. The decision of who is owed what and gets what will also most likely to up to a court which could be a civil trial or bankruptcy judge. Whether an investor will get
    money back, the worry should be will
    the investor be liable to pay money back, and therefore should get involved in a joint effort to protect themself.

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  17. I agree with Kit that we are better off having one group then multiple small groups.

    Currently I have read about two groups:
    1. Don Fischbach
    dfischbach@daklaw.com
    (559) 432-4500

    2. Tom McCurnin
    tmccurnin@bkolaw.com
    (213) 617-6129

    Does anyone know of any other groups?

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  18. There are other groups. There is a probable involuntary bankruptcy filing early next week, unless somebody already filed one.

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  19. Somebody filed a case today in Fresno seeking a receiver, but it isn't clear whether this is HL Leasing. See this link for a list of the most recent cases. The top case currently is "CA Eastern Securities/Commodities/Exchanges Civil Miscellaneous Case Receiver: Robert Mosier." Mosier does high profile bankruptcies, but without more who knows if this is HL Leasing.

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  20. Does anyone know if Tom McCurnin has agreed to take on this case in representing the victims? Don Fischbach wants an answer by noon on Monday whether or not to join that group. What is one to do?

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  21. Based on what I have heard Tom is on board to represent a group. I think he is the best person to align with at this point. He has already been working with investors and Kit and is already involved in terms of fact finding. Please reach out to Tom and let him know that you are interested. The bigger the group we can assemble the more affordable it will be. Let's just hope that fat lady has not already sang based on an earlier post regarding a possible involuntary bankruptcy.

    Tom McCurnin
    tmccurnin@bkolaw.com
    (213) 617-6129

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  22. Aloha,
    Tom is willing to move forward with the case and has spent the greater part of two days in fact finding and discussions. He is well versed in what has happened, has reviewed our Loan Agreement documents, Assignement of Interest.., marketing material provided by Dan, input received by Andy Fernandez when he was still talking (interesting comments), discussion with Marc Miles of Callahan & Blaine who were only involved with Otto for about 1 day, short conversation with alleged check writer of your checks,etc. He has about as much information as anyone could have without court assistance. He, like I (and you once you understand the ramifications) believe it would be prudent to file our suit and proceed with the investigative portion of this action without the Receivership or Bankruptcy clouding the issue. As we have no control over others it is quite possible that one of these two actions will occur in any event and we will then have to halt our case, to some degree, while the Court ordered actions proceed. We would hope to coordinate our efforts with any and all other attorneys' (or groups) as if it were possible to move forward in unison we might have a much better chance of recovering something. It is a big task but it is important to take a reasonable amount of time to put our plan in place before rushing into this. It is not going to be about the first group that sues will get the remaining marbles. Not happening.. For those of you considering other attornies or groups I encourage you, and your attornies, to contact either myself or Tom directly to see how we can join forces as we can all now admit that we weren't as smart as we thought we were and now need to move forward with a great deal more thought than we have in the past. As a footnote, I am not an attorney, or a CPA and am only sharing information and opinions formed after working on this non stop for the last two weeks.

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  23. I have no legal background whatsoever, so I'm seeking support here from fellow investors in figuring what the next step should be. Based on the posting from Unfortunate Investor, it sounds like we should contact Tom first. BTW, did anyone else receive e-mail from Don Fischbach about the deadline for Monday at noon and the possible steps to take? That e-mail was time stamped at 4:36 today.

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  24. Investors who received interest payments during a specific period of
    time before a bankruptcy and/or principal back may be required to return the money. You will need an
    attorney to represent you in a BK
    court. It is smarter to split the costs and also be better prepared.

    Involuntary BK's take a certain number of creditors and criteria.
    Most of the high dollar amounts then
    convert to Voluntary BK.

    Don't make the same mistake you did when you invested in HL Leasing that
    you know everything. This will be a complicated case, not a simple personal bankruptcy filing.

    Think about it. You are 25 here, but
    allegedly there are 1,000 investors.
    Are they too forming groups of special
    interests? You should not hesitate or
    think you know everything. You need
    someone who not only knows the law,
    but can speak the language, and understands equipment finance and leasing, has the experience to protect
    your interests, whether you think have any or whether you might have to return money to the creditors in a bankruptcy hearing.

    Each of you should be contacting another investor, like a telephone
    brigade, and joining together.

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  25. Thank you Kit for all of your information, I will follow this blog closely. I hope you all will keep posting comments regarding this mess we are in.

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  26. The FBI has been in contact with us ex-employees of JO just today. I know this won't bring your money or heartache back but just wanted you to know that they are working on it.

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  27. John Otto owns Air Fred (sole managing member) and Air Fred owns a Citation worth 2.5 million. Gross income for this business is approximately 750k per year.

    If John Otto paid for that aircraft with funds obtained from the investors I would think that asset could be liquidated to pay back investors. It's a small amount but it's a start.

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  28. Has anyone contacted the media in the desert (the Desert Sun and local TV news stations)? That might be a good way to get the word out to other investors.

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  29. My heart goes out to each and every one of you. I am so sorry this has happened. Although I have no money invested with John Otto, nor am I involved in any of his businesses and never have been, I knew him very well. Apparently, not well enough though.

    I hope all of you get your money back. I will do my best to help.

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  30. Kit - In your post you stated, "Investors who received interest payments during a specific period of time before a bankruptcy and/or principal back may be required to return the money.". Are you saying that if a note had expired towards the end of last year and I was paid back the money from HL Leasing I could be forced to give that money back, even though I have lost a ton of cash because of this? That is completely ridiculous. If they did take the money who would it go to? As ripped off investors what scenario would put us at risk to having our interest and/or principal taken from us? Would the involuntary bankruptcy cause that to happen? Isn't that what Don Fischbach is looking to do? I think we need to all think this through before we do something that causes us to lose even more than they have.

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  31. RE: My heart goes out to each and every one of you.

    Is that you notcutedamnit?

    Have you had a chance to talk with your mom about this? Has she said anything to you about what is going on? There are people, including myself, that have been completely destroyed because of the actions of John Otto. We need answers desperately.

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  32. Does HL continue as a business entity? Given it was a corporation would it not be true that some officer would take over and the corporate entity continue?

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  33. FBI probes Fresno-based business; CEO found dead

    Equipment-leaser may be behind a Ponzi scheme.

    By Tim Sheehan and Sanford Nax / The Fresno Bee
    http://www.fresnobee.com/business/story/1408608-p2.html

    Hundreds of people across the country stand to lose millions of dollars in what investigators describe as a Ponzi scheme based out of a Fresno equipment-leasing company.

    And the man FBI agents believe masterminded it all -- John W. Otto, a pioneer in the equipment-leasing industry -- committed suicide this week in Palm Desert.

    His death complicates what investigators say will be an enormous task: tracking down where all the money went, and whether others in Otto's firm -- HL Leasing -- were involved.

    FBI agents began looking into Otto and HL Leasing after investors complained that they had not received April interest payments on their investments with the firm. As many as 1,200 victims nationwide could lose the money they entrusted to Otto, investigators say.

    "At this point, it does appear to be a Ponzi scheme," said Steve Dupre, an FBI spokesman in Sacramento. "Right now, from our preliminary review, it appears that $138 million is the potential loss in this case."

    A Ponzi scheme typically involves using money from new investors to pay earlier investors. A notable example is the multibillion-dollar scam by Wall Street businessman Bernard Madoff that surfaced last fall.

    About 200 to 300 victims are from the Fresno area, Dupre said.

    At the West Shaw Avenue office building HL Leasing shared with another Otto enterprise, Heritage Pacific Leasing, the doors are locked, the blinds are drawn tight and the lights are out.

    "Due to the untimely death of Mr. John Otto, CEO of HL Leasing, the offices are closed until further notice," reads a sign taped to the door.

    Otto, 67, died Monday from a self-inflicted gunshot wound to the head, said Scot Collins, a lieutenant with the coroner's bureau of the Riverside County Sheriff's Office.

    Collins said Otto shot himself about 3 p.m. in the parking lot of the Palm Desert Visitors Center. The parking lot is only a few miles from Otto's $1.98 million home near Ironwood Country Club's North golf course.

    While he lived in Palm Desert, Otto headed several leasing and financial businesses headquartered in Fresno.

    Otto's death came only days after his attorney sent a letter May 8 to investors asking for their patience. Investors who had entrusted their money with Otto said their first inkling of trouble was when their payments didn't arrive as scheduled on April 25. Some of them contacted Fresno lawyer Donald Fischbach.

    Fischbach set up a conference call for investors on Wednesday to figure out what to do. He was expecting 15 or 20 investors, but about 90 joined the call. Since then, more than 200 people have contacted his office, he said.

    He knows of people who invested anywhere from $40,000 to $1.7 million.

    The godfather of leasing

    Otto was a legend in the equipment-leasing industry, said Tom McCurnin, a Los Angeles lawyer who specializes in the business.

    "He was one of the godfathers of California leasing," he said. "He was a mover and shaker for the last 20 years."

    The leasing industry matured in the late 1980s and 1990s as an alternative to traditional financing. Businesses could lease equipment for five years and write off part of the expense.

    "It became a different way to finance equipment," said McCurnin, an attorney with the firm of Barton, Klugman and Oetting. "Prior to that, people got a bank loan to buy computers or they saved up and bought it."

    Investors said Otto told them their investments were backed by leases Otto purchased from American Express, the financial-services giant best known for its credit cards.

    But McCurnin -- who has prosecuted and defended Ponzi suspects and used to represent American Express -- believes Otto was running a scam. American Express got out of the leasing business several years ago, he said.

    Fresno police started the investigation recently but turned it over to the FBI once the scope of the case revealed potential victims in other states, said Jeff Cardinale, a Fresno Police Department spokesman.

    Dan Callahan, a Santa Ana attorney whose firm was hired by Otto last week, confirmed that he had been contacted by the FBI. But Callahan said he believes investors are jumping to premature conclusions about a scam or fraud.

    "I see there's a concern, but I certainly don't believe that's the case," Callahan said. Otto had been in the leasing business "for more than 20 years, and it's not like he had a history of defaults; we only have this one payment due in April that was not made."

    Reputation moved investors

    Otto appears to have built his business empire on his reputation.

    Wayne Cox, 69, of Clovis said he began investing with HL Leasing last year. He was introduced to HL Leasing through a friend who was a longtime investor, and spoke with dozens of other investors "who all gave glowing reviews."

    Through Otto's firm, Cox bought into contracts for equipment leases that Otto purportedly purchased from American Express at discounted rates. Cox said Otto offered 9% interest on the investments.

    "He would generate a document that had lease numbers on it, not copies of the leases themselves," Cox said. "Whatever you invested, you were investing in X amount of leases with numbers on them."

    The general term of the investment was three years, Cox said, "but they guaranteed they would buy you out at any time; that was in writing."

    Cox said he had "many thousands of dollars" invested with Otto and HL Leasing.

    But after receiving the May 8 letter from Otto's attorney, Cox began to fear he and others might be victims of a scam.

    "When I learned of the suicide Monday night, that confirmed my suspicion that there are real problems," Cox said. "That's when I thought the worst."

    Wolfgang Conzen of Fresno is another concerned investor.

    "I met Mr. Otto once. I thought he was a decent, nice guy," Conzen said. "Of course, this guy Madoff was a nice guy, too."

    Conzen wasn't aware that Otto had taken his own life until Friday.

    "That makes me even more worried," he said. "Something's definitely wrong now."

    But the death wasn't the first sign of trouble. In an April 28 letter to investors, Otto advised that HL Leasing wouldn't be able to make its April 25 payment, because the firm was in the process of being sold. Closing was expected on May 8.

    "Until this agreement is consummated, HL will freeze all accounts," he wrote. "No payments will be made and no new monies will be accepted by HL Leasing. I will do everything in my power to speed this transaction up so as to get your check to you as quickly as possible."

    Law firm contacted

    On May 8, however, Otto contacted Callahan's law firm because investors were concerned about the April payment, Callahan said.

    "He said he wanted to make sure payments went to investors, because he was going to be selling the business," Callahan said Friday. But the buyer reportedly canceled the sale because Otto's health condition -- he reportedly had cancer that spread to his lungs -- prevented him from fulfilling a sale condition that he stay with the company for two years.

    "Because the buyer backed out, there was a delay in making the April payment," Callahan said Otto told attorneys.

    Callahan said he hopes to unravel the situation to get money back into the hands of investors.

    "We're trying to obtain all the documents that show where the money came from, where it went and who's supposed to be paying it back," Callahan said. "We're trying to forensically look at all of the documents, look at all of the computer records and find out what has been transpiring."

    Callahan added that his own investigation has revealed Otto had "no checkered past, no criminal convictions or things that would be the normal indicia of someone doing something illegal."

    Dupre of the FBI said HL Leasing is cooperating in the investigation.

    Dan Ramirez, who public documents show is the president of HL Leasing, could not be reached for comment Friday.

    Dupre said agents have recovered evidence from the company's offices in Fresno but have not yet searched Otto's Palm Desert home.

    Otto's suicide "does add a wrinkle to what we do going forward," Dupre said.

    "At this point it appears he was the organizer of this scam, but we have a tremendous amount of documents and evidence that may point us in other directions," he said. "We have a lot of work ahead of us."

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  34. http://www.leasingnews.org/archives/February%202008/02-22-08.htm#saleStory posted a year ago:

    Leasing News reported that Ron Mitchell left Heritage Pacific Leasing, Fresno, California, at the end of November as well as others, thus the reason he joined Banclease Acceptance Corporation on January 10, 2008. In fact, the entire sales staff including Rick Gatelli, CLP, the president, and Charlie Litt, Senior Vice-President, were let go.

    Leasing News held the story as a courtesy to the participates until John Otto, the owner, CEO, confirmed that he has rejected an offer to sell the company to Rick Gatelli, CLP, Charlie Litt, and John
    Estok, CLP, formerly of IFC Credit Corporation and First Portland Corporation (please see archives above.) Otto says he has another suitor and is considering it, but does not need to sell the company.

    He divested himself of his investment in Pentech Financial, Campbell, California, last year, he confirmed, and as readers know closed down Centerpoint Leasing after Gordon Roberts was convicted of theft. Otto was the major investor in the company.

    He had nothing but high compliments to make of the people who left in November, saying he wanted to get out of direct originations and was now more involved in buying portfolio’s, managing portfolio’s
    for small banks, and too busy in his charter aviation company. He says he still enjoys the leasing business, but the impression was he saw the writing on the wall last year, as well as he wants to
    travel more and enjoy life more.

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  35. Why is the Deset Sun not on this story !!


    Miss Ironwood

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  36. You should ask the Desert Sun. I don't mean to be rude, but they probably do not read Leasing News nor the Fresno Bee.
    But seriously, the way they will find out is if people such as yourself call and ask them why they don't have the story? I am sure the answer will be they didn't know. Just as perhaps 800 HL Leasing investors don't know.

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  37. Kit; At this point I have more questions than answers. I don't want to throw money at a seed to make it grow just to have to keep feeding it. I, like most of us have lost enough so far and I'm skeptical of all the options being tossed out there. One attorney says this is the way to go, but need to know by X day to start. Sorry, but to put it that way really makes me want to run for the door, and question what is the best way! I'm really confused as to what to do. I don't want to sit back and do nothing and loose out on future possible returns, but I don't want to jump into anything based on emotions at this point. Which means sitting back and waiting to see what goes down. I think it is safe to say we are all thinking what do I do at this point, who do I trust anymore. And the comment about the Bankruptcy thing scares me even more. They have everything I got and I might have to pay back more, give me a break. I don't know how the laws work on this type of thing which is why I need answers that I can understand without having to pull out the lawyers dictionary. dj

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  38. This will sweep out of your control very shortly. Google has picked up
    the Fresno Bee story and two local television interviews. In one, Otto's attorney says there is money:http://www.kmph.com/Global/story.asp?S=10373262&nav=menu612_2_6

    It is also now 1,100 investors and $200 million, according to the news report.

    It is interesting to me as an investor that few, if any, ever verified the information in the agreements, spoke to another leasing company about what this meant, or consulted an attorney who would have certainly asked some more questions, or spoken to a CPA or a certified investor or even a stock broker.

    It appears to me many are taking the same approach, not looking into this further, learning their rights and what they may be exposed to, but just sitting back and letting whatever happens happen again.

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  39. I am within a group of 8 investors who put in a significant amount of life savings. Among us is an attorney who has been practicing law for over 20 years including probate and 40 cases of bankruptcy. He's brought up an important question that I don't have an answer to, and hoping a reader on this blog would have, especially those who reside in the Fresno area. And that question is this: The initial call to Dan Ramirez directed us to his attorney Jorgenson, but that law office re-directed the investors to Dan Fischbach. Does anyone know why, in particular, Mr. Fischbach, was chosen? What are his personal or professional relations? We need to examine this more closely in that, if Dan Ramirez is involved in this that his attorney isn't just referring the investors to Jorgenson's buddy to help cover his and his clients back.

    And if we assume that that there are no conflicts of interest for the two attorneys and proceed with Mr. Fischbach, what is it that he will do that differs from Mr. McCurnin mentioned in this blog? If the two attorneys are doing the same thing, wouldn't/shouldn't we be choosing one to get the most of amount of money we can recover in the shortest amount of time for the least amount of legal fees? In other words, not to splinter into two groups and only have one voice representing the investors?

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  40. The questions you bring up are valid and have been echoed by any number of people I have spoken to over the last few days since I put the blog up. While I can't answer as to Mr. Fischbach's credentials or how he became involved, his conference call indicated that he did have a number of clients (I assume he represented in other matters) that were involved in the HL Ponzi and they all deciced to meet at his office to discuss the matter. From there it was word of mouth and a conference call feature was added which brough in another 86 individuals, according to his count. There were approximately 25 in the room as the thing started to grow. He gave his opinion on the situation with the very limited information he had at the time. He started out the meeting by pointing out that Dan Ramirez was not represented by his firm and was not privy to the meeting. He did say that Dan Ramireaz had contacted them but when it became clear there would be a conflict of interest he referred him to another attorney. Alledgedely Dan's new attorney was to be Jorgenson and I have not heard anything to the contrary (it would be good to know who he is and I'm sure we will find out).

    You may have an advantage in having an attorney in your group as he can certianly comment on the various courses of action available to us. Mr. Tom McCurnin outlined them succinctley in his quote to Kit Menkin in the Leasing News article. Mr. McCurnin contacted me on Tuesday morning and was referred by Mr. Menkin, of Leasing News, as an attorney with extensive knowledge in the leasing field (25 years). As we shared the information we had, which was significantly more information than shared at the Fischbach conference, Mr. McCurnin felt that we were dealing with a Ponzi scheme and the litigation to follow would not be as focused on the "leases" as there appear to be none, but on recovering funds from a Ponzi. Coincidently, an area he has also litigated and was well versed in. Addtionally, he has a personal interest in litigation involving "Fraudulent Conveyances" and has spent a great deal of time studying case law on the matter. He was able to immediately email me a PDF document containing his specific research into the matter (42 pages worth) which gives him some credibility in my opinion. While there are, to some degree, a limited number of legal courses of action (no magic secrets here), in truth the number of individuals involved will, unfortunately, not be able to present a united front. Regardless of which firm you might choose, other legal actions may/will impact your chosen course of action. I believe Mr. McCurrin, who also spent two days of his time tracking down the available info on the issues (for free), is qualified to pursue the matter and while he does not offer a "pot of gold" at the end, we should all realize that there, most probably, is not one. While the firm of Callahan & Blaine has been quoted in the news as "tracking the money" their involvement was quite cursory in that they drafted the letter that you received from them based on a telephone conversation with Mr. Otto on Friday the 8th. They had not met with Mr. Otto and were alledgedly scheduled to meet with him on Tuesday, 12 May. John killed himself the afternoon of Monday the 11th. On Tuesday the 12th Mr. Miles, the author of the Otto letter, was not sure of their involvement given the death of Mr. Otto, and I have no idea how/why they are involved now. Mr. McCurnin has offered to provide information to any attorneys' involved in his comments in the Leasing News which I quote "The lawyers could email me for a short article I wrote on Receivers, fraudulent conveyances, and the dichotomy of “winning investors” and “losing investors.” I would like to see the Fischbach group at least coordinate with Mr. McCurnin but there are very many legal issues involved and it does not appear that a unified front is possible. I personally will be working with Mr. McCurnin to proceed in a manner that does not casue an involuntary bankruptcy or a receivership. The first is the cheapest way to go for the investors but offers no control and puts the matter into a court appointed attorney's hands that may not ultimately be in your best interest. The receivorship is probably the most expensive way to go and you may spend a lot more money chasing after non existent dollars. While I can not speak for Mr. McCurnin our discussions seem to lean toward a very through investgative process (outside of whatever the state or feds may do), proper subpoena's for records, depositions from the parties involved, etc. This process will gvie us the missing information on where the money is, or isnt', where did it go, and what is left. Tihs process will also determine potenial criminal or personal liabilites of the principals remaining in HL and all his other corporations and his wifes involvement (if any) in the business. Sorry for the lengthy response but I think everyone is thinking along the same lines and I just thought I'd put it out there for everyone else to review and comment. I will be sending an email later today to those of you that have expressed an interst in working with Mr. McCurnin and we hope to be able to give a general outline of the process we are following sometime tomorrow. I apologize for my spelling errors as I really can spell but my fingers go faster than my brain sometimes. While these are devastating events in our lives, please step back and look at what you do have left in your life. Focusing on what you have lost can lead to serious emotional and physical problems and if you are experiencing these please seek appropraite counselling as soon as possible. Regardless of whether you lost $10,000 or over a Million (and I have talked to both ends of the spectrum) your loss is devastating to you. We all have to get past it and the legal process we are embarking on is only one step in that process. While we hope for recovery, we have to focus on the positive things in our life, of which we all have some, if nothing else we have health. This is not just a cliche' so please seek help if the emotional trauma is becoming too much.

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  41. We live in the Fresno area and are as confused as everune else is.We invested with Dan R. 15 years ago, convinced other family members to do the same. Have contacted via E mail and phone both attorneys waiting to hear back from them. Fishback says they need $10,000 now to continue or words to that affect.This blog is great. Please keep it open

    ReplyDelete
  42. To Unfortunate Investor: Do you know how many have signed up or leaning towards signing up with Mr. McCurnin? Also, is there a deadline for doing so with Mr. McCurnin, similar to Mr. Fischbach's Monday, May 18 at noon?

    ReplyDelete
  43. Callahan added that his own investigation has revealed Otto had "no checkered past, no criminal convictions or things that would be the normal indicia of someone doing something illegal."

    This is NOT true. He does have a checkered past and a criminal conviction from 40 years ago. The FBI caught him sometime in 1968 and he went to prison.

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  44. Unfortunate investor,

    Please email me at otto@thekrones.com and I will email my address to add to your contact list.

    Thanks

    ReplyDelete
  45. We do not have a specific time limit on signing up with Mr. McCurnin. If you have tried to contact him over the weekend I am sure he will respond during business hours on Monday. When, and if, he feels it would be useful, we may be able to put together a conference call to discuss matters. However, we hope to move forward on Monday and it will take a number of days to put the lawsuit together. We may be able to add individuals over the next few days but once our motions are filed, while we can still add other individuals, it becomes more expensive and cumbersome to be added after the initial filing. Mr. McCurnin is not starting out with a billing of $10,000 or any amount for work/legal adivce already given. He knows as much as anyone at this point through investigative work of his own and collaboration with Leasing News (please thank Mr. Menkin as you have no idea how much time he put into this immediately follownig the first letter from OTTO through the second letter and subsequent events--his articles are available on his website and should be read and shared as they represent as much information and history as is available anywhere on the issue.) You can choose to sit on the sidelines and watch what everyone else does and hope they share information/results with you but if you truly want to know over the "months" ahead what is going on you should have representation that will know what has happened, be able to analyze the results and propose action (or inaction) as appropriate. If our inital investigations and due dilegence reveal no funds or assets are available then we can go to the sidelines and leave it up to court appointed counsel. I personally have a dislike of litigation in any form but I can not walk away and hope to stir through the ashes in a year to figure out what happened. As I have stated, as has Mr. McCurnin, our legal efforts may be superseded at any time by the actions of others over which we have no control. I trust Mr. McCurnin to tell us when it is appropriate to move forward and incur legal fees and when it is appropriate to sit on the sidelines and not waste fees on legal actions that are not appropriate in light of new evidence as it appears. There will be no right decision by anyone on how to move forward but no decision/action is a decision. I'm sure everyone feels like a deer caught in the headlights but it is now time to jump out of the way. Please let me know by email if you would like to be included as we move forward with Mr. McCurnin and should you elect another course of action I wish you good luck as we are all in this together whether we recognize it or not.

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  46. My trust is with Mr. McCurnin, the last thing I needed to hear was someone like Mr. Fischbach who appears to be all about the $ and what's up with the Monday at noon deadline? no thanks, I've already been raped once.

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  47. I agree that Fischbach's deadline of Monday at noon and saying that we already owe $10k is not exactly reassuring that he has the investors who lost our money in mind. Seems more like a lawyer who is jumping at that opportunity to fill his pockets versus truly helping those who lost so much because f this situation. I appreciate the approach that Tom McCurnin is taking. His experience and steps already taken seem much more methodical with us in mind, not how much money he can make from this.

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  48. Thanks for all the information on this blog to help us understand or try to understand what happened. There are at least 5 probable losers in Illinois. Please keep up with information.
    dlk loser

    ReplyDelete
  49. (I agree that Fischbach's deadline of Monday at noon and saying that we already owe $10k is not exactly reassuring that he has the investors who lost our money in mind. Seems more like a lawyer who is jumping at that opportunity to fill his pockets versus truly helping those who lost so much because f this situation.)

    True. You may also want to keep in mind that no matter who you hire, they will have zero ability to research anything. The records are already secured and no civil subpoena will get them back, at least not for some months or years. I understand that Danny and Andy have both lost money and now fear other victims since the mob mentality has taken over. I should think that their doors are now closed to you. Danny and Andy were the only people who could have given you information. Unless the target is Andy, the FBI investigation will close down at some point since the US Attorney does not do civil recovery work. So, while you certainly must do what you feel you have to do, know that there are limits and at some point good money has to stop going after bad. We all lost, but remember that Ponzi's are very short lived. That means that HL was in good shape before the economy went south. So returns should have gone down over the past couple of years. That they did not says a lot. The only person who can answer "why" is the CFO. He has already spoken and the records taken by law enforcement. Not much is going to happen till those come back. Be angry, but not reckless.

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  50. I think this scheme started well before the economy went south. I first invested about 8 or 9 years ago, and doubt that even back then, any of the leases really existed. John Otto lived an opulent lifestyle and enjoyed a stellar reputation at our expense. Due to the size of the losses, I expect an involuntary bankruptcy much like the Madoff case. There will probably some assets or some money to attach, but with 1000-1200 investors and 130 - 200 million in bogus leases, we will possibly get very very little and it will take years. But due to this size, the Fed or Calif. will be involved.

    As to Dan and Andy, they probably did not know exactly what Otto was doing, but there must have been indications that something was just not right. And the comments about lenders never really getting requested information about 'their leases' is disturbing. Well they were getting paid from our money too. As to a mob mentality, since we will never get the satisfaction of seeing Otto behind bars, perhaps the others, who though not the mastermind, share some guilt and need to share our pain. And towards the end they had to know as they took in more money to feed this monster.
    Sorry I am not ready to forgive yet, I prefer to see some retribution.

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  51. It is easy to lead a group when they are panicked and confused. I would hope that each person would prayerfully take all options into consideration before jumping on any one person's wagon. Please excuse my skepticism but given the recent events, I am not one to trust easily based on a blog posting.

    Also, please remember that anything you post publicly, such as this blog, can be used in court so choose your words wisely.

    I am, as well, extremely disappointed at the recent turn of events. Many families are feeling the choke of this economy and relied on their investments to bring some level of relief. This has greatly impacted my family as well.

    It is true our legal system may have failed in many ways to bring justice in different matters. I trust, given the extreme media attention matters such as this have received this last year, that this will be handled forthrightly.

    You are right, we will never get the satisfaction of seeing John Otto behind bars. Yes, they had to know as they took in more money. The claims of ignorance are used by those who are bound by cowardly standards of unethical and deprived hearts. What is in a man's heart is confirmed by his actions.

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  52. What was John Otto convicted of and did prison time for in 1968?

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  53. His daughter was just in Palm Desert a month ago and a week before he committed suicide he was in Minneapolis visiting her.

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  54. Desert Sun:

    http://www.mydesert.com/article/20090518/NEWS08/90518028/Palm+Desert+businessman+s+suicide+complicates+FBI+s+Ponzi+investigation+

    Palm Desert businessman's suicide complicates FBI's Ponzi investigation

    Were you an investor? Call reporter Debra Gruszecki at 778-4643.

    By Tim Sheehan and Sanford Nax / The Fresno Bee • May 18, 2009


    Hundreds of people across the country stand to lose millions of dollars in what investigators describe as a Ponzi scheme based out of a Fresno equipment-leasing company.


    And the man FBI agents believe masterminded it all -- John W. Otto, a pioneer in the equipment-leasing industry -- committed suicide last week in Palm Desert.



    His death complicates what investigators say will be an enormous task: tracking down where all the money went, and whether others in Otto's firm -- HL Leasing -- were involved.


    FBI agents began looking into Otto and HL Leasing after investors complained that they had not received April interest payments on their investments with the firm. As many as 1,200 victims nationwide could lose the money they entrusted to Otto, investigators say.


    "At this point, it does appear to be a Ponzi scheme," said Steve Dupre, an FBI spokesman in Sacramento. "Right now, from our preliminary review, it appears that $138 million is the potential loss in this case."


    A Ponzi scheme typically involves using money from new investors to pay earlier investors. A notable example is the multibillion-dollar scam by Wall Street businessman Bernard Madoff that surfaced last fall.


    Otto, 67, died Monday from a self-inflicted gunshot wound to the head, said Scot Collins, a lieutenant with the coroner's bureau of the Riverside County Sheriff's Office.


    Collins said Otto shot himself about 3 p.m. in the parking lot of the Palm Desert Visitors Center. The parking lot is only a few miles from Otto's $1.98 million home near Ironwood Country Club's North golf course.


    While he lived in Palm Desert, Otto headed several leasing and financial businesses headquartered in Fresno.


    Otto's death came only days after his attorney sent a letter May 8 to investors asking for their patience. Investors who had entrusted their money with Otto said their first inkling of trouble was when their payments didn't arrive as scheduled on April 25. Some of them contacted Fresno lawyer Donald Fischbach.


    Fischbach set up a conference call for investors on Wednesday to figure out what to do. He was expecting 15 or 20 investors, but about 90 joined the call. Since then, more than 200 people have contacted his office, he said.

    (2 of 3)



    He knows of people who invested anywhere from $40,000 to $1.7 million.

    Fresno police started the investigation recently but turned it over to the FBI once the scope of the case revealed potential victims in other states, said Jeff Cardinale, a Fresno Police Department spokesman.


    Dan Callahan, a Santa Ana attorney whose firm was hired by Otto last week, confirmed that he had been contacted by the FBI. But Callahan said he believes investors are jumping to premature conclusions about a scam or fraud.


    "I see there's a concern, but I certainly don't believe that's the case," Callahan said. Otto had been in the leasing business "for more than 20 years, and it's not like he had a history of defaults; we only have this one payment due in April that was not made."



    Otto appears to have built his business empire on his reputation.


    Wayne Cox, 69, of Clovis said he began investing with HL Leasing last year. He was introduced to HL Leasing through a friend who was a longtime investor, and spoke with dozens of other investors "who all gave glowing reviews."


    Through Otto's firm, Cox bought into contracts for equipment leases that Otto purportedly purchased from American Express at discounted rates. Cox said Otto offered 9% interest on the investments.


    "He would generate a document that had lease numbers on it, not copies of the leases themselves," Cox said. "Whatever you invested, you were investing in X amount of leases with numbers on them."


    The general term of the investment was three years, Cox said, "but they guaranteed they would buy you out at any time; that was in writing."


    Cox said he had "many thousands of dollars" invested with Otto and HL Leasing.


    But after receiving the May 8 letter from Otto's attorney, Cox began to fear he and others might be victims of a scam.


    "When I learned of the suicide Monday night, that confirmed my suspicion that there are real problems," Cox said. "That's when I thought the worst."


    Wolfgang Conzen of Fresno is another concerned investor.


    "I met Mr. Otto once. I thought he was a decent, nice guy," Conzen said. "Of course, this guy Madoff was a nice guy, too."

    (3 of 3)



    Conzen wasn't aware that Otto had taken his own life until Friday.


    "That makes me even more worried," he said. "Something's definitely wrong now."


    But the death wasn't the first sign of trouble. In an April 28 letter to investors, Otto advised that HL Leasing wouldn't be able to make its April 25 payment, because the firm was in the process of being sold. Closing was expected on May 8.


    "Until this agreement is consummated, HL will freeze all accounts," he wrote. "No payments will be made and no new monies will be accepted by HL Leasing. I will do everything in my power to speed this transaction up so as to get your check to you as quickly as possible."



    On May 8, however, Otto contacted Callahan's law firm because investors were concerned about the April payment, Callahan said.


    "He said he wanted to make sure payments went to investors, because he was going to be selling the business," Callahan said Friday. But the buyer reportedly canceled the sale because Otto's health condition -- he reportedly had cancer that spread to his lungs -- prevented him from fulfilling a sale condition that he stay with the company for two years.


    "Because the buyer backed out, there was a delay in making the April payment," Callahan said Otto told attorneys.


    Callahan said he hopes to unravel the situation to get money back into the hands of investors.


    "We're trying to obtain all the documents that show where the money came from, where it went and who's supposed to be paying it back," Callahan said. "We're trying to forensically look at all of the documents, look at all of the computer records and find out what has been transpiring."


    Callahan added that his own investigation has revealed Otto had "no checkered past, no criminal convictions or things that would be the normal indicia of someone doing something illegal."


    Dupre of the FBI said HL Leasing is cooperating in the investigation.


    Dan Ramirez, who public documents show is the president of HL Leasing, could not be reached for comment Friday.


    Dupre said agents have recovered evidence from the company's offices in Fresno but have not yet searched Otto's Palm Desert home.


    Otto's suicide "does add a wrinkle to what we do going forward," Dupre said.


    "At this point it appears he was the organizer of this scam, but we have a tremendous amount of documents and evidence that may point us in other directions," he said. "We have a lot of work ahead of us."

    He knows of people who invested anywhere from $40,000 to $1.7 million.

    Fresno police started the investigation recently but turned it over to the FBI once the scope of the case revealed potential victims in other states, said Jeff Cardinale, a Fresno Police Department spokesman.


    Dan Callahan, a Santa Ana attorney whose firm was hired by Otto last week, confirmed that he had been contacted by the FBI. But Callahan said he believes investors are jumping to premature conclusions about a scam or fraud.


    "I see there's a concern, but I certainly don't believe that's the case," Callahan said. Otto had been in the leasing business "for more than 20 years, and it's not like he had a history of defaults; we only have this one payment due in April that was not made."



    Otto appears to have built his business empire on his reputation.


    Wayne Cox, 69, of Clovis said he began investing with HL Leasing last year. He was introduced to HL Leasing through a friend who was a longtime investor, and spoke with dozens of other investors "who all gave glowing reviews."


    Through Otto's firm, Cox bought into contracts for equipment leases that Otto purportedly purchased from American Express at discounted rates. Cox said Otto offered 9% interest on the investments.


    "He would generate a document that had lease numbers on it, not copies of the leases themselves," Cox said. "Whatever you invested, you were investing in X amount of leases with numbers on them."


    The general term of the investment was three years, Cox said, "but they guaranteed they would buy you out at any time; that was in writing."


    Cox said he had "many thousands of dollars" invested with Otto and HL Leasing.


    But after receiving the May 8 letter from Otto's attorney, Cox began to fear he and others might be victims of a scam.


    "When I learned of the suicide Monday night, that confirmed my suspicion that there are real problems," Cox said. "That's when I thought the worst."


    Wolfgang Conzen of Fresno is another concerned investor.


    "I met Mr. Otto once. I thought he was a decent, nice guy," Conzen said. "Of course, this guy Madoff was a nice guy, too."

    (3 of 3)



    Conzen wasn't aware that Otto had taken his own life until Friday.


    "That makes me even more worried," he said. "Something's definitely wrong now."


    But the death wasn't the first sign of trouble. In an April 28 letter to investors, Otto advised that HL Leasing wouldn't be able to make its April 25 payment, because the firm was in the process of being sold. Closing was expected on May 8.


    "Until this agreement is consummated, HL will freeze all accounts," he wrote. "No payments will be made and no new monies will be accepted by HL Leasing. I will do everything in my power to speed this transaction up so as to get your check to you as quickly as possible."



    On May 8, however, Otto contacted Callahan's law firm because investors were concerned about the April payment, Callahan said.


    "He said he wanted to make sure payments went to investors, because he was going to be selling the business," Callahan said Friday. But the buyer reportedly canceled the sale because Otto's health condition -- he reportedly had cancer that spread to his lungs -- prevented him from fulfilling a sale condition that he stay with the company for two years.


    "Because the buyer backed out, there was a delay in making the April payment," Callahan said Otto told attorneys.


    Callahan said he hopes to unravel the situation to get money back into the hands of investors.


    "We're trying to obtain all the documents that show where the money came from, where it went and who's supposed to be paying it back," Callahan said. "We're trying to forensically look at all of the documents, look at all of the computer records and find out what has been transpiring."


    Callahan added that his own investigation has revealed Otto had "no checkered past, no criminal convictions or things that would be the normal indicia of someone doing something illegal."


    Dupre of the FBI said HL Leasing is cooperating in the investigation.


    Dan Ramirez, who public documents show is the president of HL Leasing, could not be reached for comment Friday.


    Dupre said agents have recovered evidence from the company's offices in Fresno but have not yet searched Otto's Palm Desert home.


    Otto's suicide "does add a wrinkle to what we do going forward," Dupre said.


    "At this point it appears he was the organizer of this scam, but we have a tremendous amount of documents and evidence that may point us in other directions," he said. "We have a lot of work ahead of us."

    Conzen wasn't aware that Otto had taken his own life until Friday.


    "That makes me even more worried," he said. "Something's definitely wrong now."


    But the death wasn't the first sign of trouble. In an April 28 letter to investors, Otto advised that HL Leasing wouldn't be able to make its April 25 payment, because the firm was in the process of being sold. Closing was expected on May 8.


    "Until this agreement is consummated, HL will freeze all accounts," he wrote. "No payments will be made and no new monies will be accepted by HL Leasing. I will do everything in my power to speed this transaction up so as to get your check to you as quickly as possible."



    On May 8, however, Otto contacted Callahan's law firm because investors were concerned about the April payment, Callahan said.


    "He said he wanted to make sure payments went to investors, because he was going to be selling the business," Callahan said Friday. But the buyer reportedly canceled the sale because Otto's health condition -- he reportedly had cancer that spread to his lungs -- prevented him from fulfilling a sale condition that he stay with the company for two years.


    "Because the buyer backed out, there was a delay in making the April payment," Callahan said Otto told attorneys.


    Callahan said he hopes to unravel the situation to get money back into the hands of investors.


    "We're trying to obtain all the documents that show where the money came from, where it went and who's supposed to be paying it back," Callahan said. "We're trying to forensically look at all of the documents, look at all of the computer records and find out what has been transpiring."


    Callahan added that his own investigation has revealed Otto had "no checkered past, no criminal convictions or things that would be the normal indicia of someone doing something illegal."


    Dupre of the FBI said HL Leasing is cooperating in the investigation.


    Dan Ramirez, who public documents show is the president of HL Leasing, could not be reached for comment Friday.


    Dupre said agents have recovered evidence from the company's offices in Fresno but have not yet searched Otto's Palm Desert home.


    Otto's suicide "does add a wrinkle to what we do going forward," Dupre said.


    "At this point it appears he was the organizer of this scam, but we have a tremendous amount of documents and evidence that may point us in other directions," he said. "We have a lot of work ahead of us."

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  55. Embezzlement. He was working as a stock broker in Minnesota.

    ReplyDelete
  56. Otto walked into the office ten days before the letter was composed. Callahan said at the time he had never met him and his role was to make the statement Otto wanted to make in legal terms, and provided him with the statement on letterhead that
    Otto used and sent to others. Callahan at the time did not know who the buyer was nor had any other information, he said at the time.


    You will soon realize all the parties involved with HL Leasing and Heritage Pacific Leasing will have attorneys who will be doing all the talking for them. The FBI will then only go public with an indictment and once issued, any comments will need full
    FBI and AG approval as they will consider the issue being prepared for the courts and not the news media.

    ReplyDelete
  57. Does anyone know why Trust Company of America agreed to accept these leasing notes in self directed IRA accounts?

    Illinois investors were told that TCA had fully vetted HL Leasing, and it was used as a sales tool by Dan Ramirez to pull in new investors at seminars around the country.

    Illinois investors have contacted TCA to ask how John Otto managed to convince TCA, the largest of its kind in this country, to hold HL Leasing notes for its IRA customers. When informed of the FBI investigation and the Leasing News site, the customer representative quickly sent the news straight up the channels. As of last week, TCA didn't know about the potentially fraudulent notes.

    Also, are there any other trust companies/ brokerages that agreed to hold the notes, and how much vetting did they do?

    Appears that there's no recourse for losses held in a retirement account, unless they were after-tax contributions. Does anyone know of another avenue of relief?

    ReplyDelete
  58. Dan Ramirez needs to be looked at very carefully. HOW DID HE NOT KNOW. He led a very extravagant lifestyle just like John Otto. He says he "invested" his own money. Sure he did, to make it look good. Why not invest a small portion of the millions that he stole??

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  59. Dan Ramirez had to have known. He told all of us the same story that between him and his family he had a couple of million invested. I guess when they start looking at the details all of that will hopefully be figured out. I never thought he was the sharpest tool in the tool shed but apparently he was able to out smart all of us. Him and Norma must have known what was going on or at least some idea. I find it hard to believe that they were as blind as we were. Otto may have avoided prison time but hopefully Dan and Norma will enjoy the rest of their years behind bars wishing they did not take advantage of innocent, hardworking people.

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  60. Sure he had couple of million invested. It was our millions he was investing and probably making 9%. That way if the you know what hit the fan he could play dumb and say he had no idea. God is dealing with John Otto and Dan, Andy and Norma will get their day as well.

    God always looks after his children, especially during times like this.

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  61. It was mentioned that Dan made 2 Million dollars last year.

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  62. What did Norma make? 1.5 million to be his admin assistant. It just keeps getting better and better. Guess it won't matter how much money they have if they are in prison. Of course they will be able to afford good lawyers!

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  63. Wow. This sounds a bit like the Capital Consultants ponzi scheme with Wilshire Financial. May give some insight as to how it plays out, Jeff Grayson of Capital Consultants was the main player in the fraud.

    ReplyDelete
  64. Here is the story. A bit different but there are some similarities.

    Feds seize Capital Consultants
    The firm's executives allegedly ran a Ponzi-like scheme to cover up the loss of $160 million of clients' money

    Friday, September 22, 2000



    --------------------------------------------------------------------------------
    By James Long and Jeff Manning of The Oregonian staff
    Federal authorities seized control of Portland investment advisory firm Capital Consultants LLC Thursday and accused the firm's two top executives of running a "Ponzi-like scheme" to cover up the loss of as much as $160 million in client money.



    In running the alleged fraud, regulators said, the money manager may have further deepened clients' losses to more than $200 million.

    Much of the money came from at least 20,000 union members and retirees and their families, whose pension and benefits funds were managed by Capital Consultants.

    A federally appointed receiver took permanent control of Capital Consultants' downtown Portland office Thursday afternoon.

    Jeffrey L. Grayson, 58, and Barclay L. Grayson, 30, who are father and son and the senior executives of Capital Consultants, were banned from the office and preliminarily barred from managing pension money, a first step toward a possible permanent ban.

    The court order appointing the receiver also froze the Graysons' personal assets.

    The U.S. Department of Labor and the Securities and Exchange Commission obtained the order seizing the investment firm shortly after the agencies filed separate lawsuits in federal court. The lawsuits charged that the Graysons and Capital Consultants orchestrated what one SEC lawyer termed "one of the largest frauds perpetrated by an investment advisor."

    "Essentially (the Graysons) took people's retirement money and (they've) stolen it through the Ponzi scheme," said the attorney, Kelly Bowers, assistant regional director of the SEC's office of enforcement.

    Federal officials said the civil lawsuits don't preclude criminal prosecution that may result from an ongoing federal investigation that includes the Internal Revenue Service, the Federal Bureau of Investigation and the Labor Department.

    The Graysons declined, through their lawyers, to comment on the civil actions. "We're trying to resolve this in the courts and don't think comment is appropriate at this time," said Milo Petranovich, a Portland lawyer representing Capital Consultants.

    In a hearing in U.S. District Court on Thursday, attorneys for neither the Graysons nor Capital Consultants opposed the government takeover of the company.

    The lawsuits describe a series of financial maneuvers that have been detailed in The Oregonian the past 11 months.

    These events have their roots in a series of loans totaling $160 million that Capital Consultants extended to the former Wilshire Credit Corp. of Portland.

    The Labor Department said, in its lawsuit, that the loans themselves were so risky from the outset that they violated federal laws governing the investment of pension money.

    "We went after (Capital Consultants) because of their flagrant violation of the law in the handling of more than 60 union and retirement plans," said Bette Briggs, director of the Labor Department's pension oversight office in San Francisco.

    The loans became a disaster for Capital Consultants in 1998 when Wilshire Credit and its affiliate Wilshire Financial Services Group nearly failed. Wilshire Financial went bankrupt in March 1999.

    Rather than tell clients that their $160 million was gone, according to the lawsuits, the Graysons cobbled together an elaborate charade intended to hide the loss and convince clients that the investment was in fine shape. The Graysons told their clients that a New Jersey company, and later a Miami, Fla.-based operation, had agreed to assume the $160 million debt.

    From 1999 to the present, clients continued to receive payments that Capital Consultants represented as interest payments on the Wilshire loans. But, the lawsuit charges, neither Sterling Capital of New Jersey nor Brooks Financial of Miami was capable of making the $1.5 million monthly "interest" payments.

    According to The Oregonian's investigation, Sterling had virtually no assets and no business other than its relationship with Capital Consultants. Brooks was part of a low-rent family of used-car and furniture lenders in a seedy neighborhood of Miami.

    To conceal the loss, the lawsuit said, Capital Consultants loaned another $71 million to Sterling and Brooks and related companies. Those companies, the lawsuit said, returned some of the money to Capital, which in turn presented the funds to its clients as "interest payments" on the original $160 million loans. Thus, the SEC's lawsuit said, Capital Consultants basically paid its clients back with their own money and told them the loans were paying off.

    In the process, the lawsuit said, the Graysons may have expanded the $160 million black hole from the Wilshire debacle by as much as that $71 million.

    Moreover, the lawsuit said, Capital Consultants continued to charge its clients a full 3 percent management fee on both the vanished $160 million loan and on the new $71 million loans that figured in the alleged Ponzi scheme.

    The SEC's Bowers said his agency, along with the Labor Department, took Thursday's action to prevent losses suffered by the Graysons' clients from becoming even greater.

    "Immediate action was necessary," he said. "Our purpose is to stem the flow of (union pension) plan assets. We hope to bar them (the Graysons) from ever dealing with (pension) plans in the future and if possible to recover assets," Bowers said.

    U.S. District Court Judge Garr M. King appointed Thomas F. Lennon receiver of Capital Consultants. Lennon, a business turnaround expert based in LaMesa, Calif. entered Capital Consultants offices Thursday afternoon.

    Lennon was appointed as a "permanent" receiver, meaning he will eventually shut down Capital Consultants for good. Lennon said he will retain a small fraction of the company's 40 employees to assist him.

    "It looks like a real mess," he said.

    Employees were told Thursday that the company is likely to be totally closed in four months.

    Several Northwest union pension and benefit funds stand to lose millions of dollars. The Oregon and Idaho Laborers invested at least $20 million. The United Association Local 290 Plumbers Steamfitters and Shipfitters have about $17 million on the line. Local 11 of the Office and Professional Employees International Union has its entire 401(k) fund invested with Capital Consultants, though only some of that may be at risk.

    More than a dozen lawyers attended the hearing. Petranovich represented Capital Consultants, while Norm Sepenuk represented Jeffrey Grayson and Steven B. Ungar represented Barclay Grayson. Mort Zalutsky represented three labor union trust funds including the laborers, plumbers and office workers, while Robert B. Miller represented the trustees of the same funds; Nicolas Morgan and Bowers represented the SEC; Stacey E. Elias represented the Department of Labor; Marc D. Blackman represented Andrew Wiederhorn, former CEO of Wilshire Credit and Wilshire Financial; and Ronald H. Hoevet represented Larry Mendelsohn, Wiederhorn's top lieutenant at the Wilshire companies.

    Larry Miller, a longtime member of the Oregon Laborers Union local 296, said members are extremely anxious about the fate of their retirement money. "The retirees are calling me up," said Miller, a rank-and-file delegate to the Laborers' district council, which oversees investment decisions. "They want to know if they are going to get their pension checks, and I have to tell them I don't know the answer."



    --------------------------------------------------------------------------------

    ReplyDelete
  65. I've been out of work for a while, and was able to make do on my HL payments. What do I do now? I have to sell my house that I have lived in for 30 years to support my family.
    And I just read that Dan made 2 million last year and suckered me in to put more money in HL as well as renewing notes that were coming up. I'm sure he is looking at ways to hide some of the money he made from us. We all know that Otto had to stashed some of that away - his wife knows where it is.

    ReplyDelete
  66. No I think you are going to find that there will be NO MONEY stashed anywhere. The life styles both these men and woman led took alot of money . Greedy people don't save. They spend. The rolls royce that Otto had was financed. Million dollar home was mortgaged to the "hilt". I don't think there is any money.

    ReplyDelete
  67. He also put all of your money into the Leasing Business which was a loser. He needed that business as a front for the investors.

    ReplyDelete
  68. There is money. Why hasn't the FBI gone through Otto's house?

    ReplyDelete
  69. Hear/say, at this point, but it was brought to my attention that Otto spent alot of time traveling over seas. If that's the case, and he was transfering money to over seas accounts, we can kiss that goodbye. Has anyone heard this also? dj

    ReplyDelete
  70. How do you know that the FBI has not seized documents from Palm Desert? As they collect evidence, they will reach a point where they believe they
    have enough to indict, get a confession, or perhaps go to a grand jury.

    John Otto's body was turned over to the mortuary, but no service has been planned.

    The Desert Sun may have more information when they publish their
    story. Leasing News will have an up-date Wednesday.

    ReplyDelete
  71. AP picked up the story from the Fresno
    Bee---this is the story now making
    the rounds of newspapers:

    http://www3.signonsandiego.com/stories/2009/may/18/ca-sj-valley-ponzi-scheme-051809/?california

    Fresno businessman, accused in Ponzi, kills self
    The Associated Press 12:43 p.m. May 18, 2009
    FRESNO, Calif. — Investigators say 1,200 people could be out up to $138 million, victims of what they described as a Ponzi scheme.
    The man the FBI says was behind the scheme, 67-year-old John W. Otto, committed suicide last week in Palm Desert. Otto ran an equipment leasing company based in Fresno.
    The FBI began looking into HL Leasing after investors complained in April they had not received interest payments. In Ponzi schemes, the mastermind often uses money from new investors to pay others.
    Fresno attorney Donald Fischbach says he set up a conference call for investors expecting 20, but 90 joined in and nearly 200 in total have contacted his office. They invested between $40,000 and $1.7 million.
    –––
    Information from: The Fresno Bee, http://www.fresnobee

    ReplyDelete
  72. A lot of time spent overseas. Dubai several times.
    Millions and millions worth of jewelry.

    ReplyDelete
  73. How do you know that the Rolls was financed? What about the Aston Martin that Mrs. Otto drives?
    Apparently 300,000 was spent to add a new bar to their Palm Desert home recently.

    ReplyDelete
  74. Just got off the phone with Mr. Mccurinin a fount of knowledge if you have not spoke to him suggest you do so. I used the phone number listed in this blog and surprise he answered.his advice hold off for a couple of weeks and see what comes down.

    ReplyDelete
  75. I have been told by one of Otto's pilots that the aircraft, N725CC, is worth 2.5 million and was paid for in cash a few years ago.

    ReplyDelete
  76. That's really good news. So with 200 Million in unsecured fraud debt, and at least 500K in Receiver fees, there might be 2 million left or we might get $1,000 for each 100K we invested. Not even enough for a cheap casket after we have to commit suicide for life insurance for our families.

    ReplyDelete
  77. A very big THANK YOU goes to the Unfortunate Investor and to the folks at Blogspot for making this blog happen.
    Does anyone know if any real facts about a scam have been published? Please let this group know. The way I'm reading it right now the investigation is underway and there are a lot of worried people, including myself. I'll withold any judgement until the facts are revealed. Chances are it is a scam, but there is a slim chance Otto's business was just doing poorly and/or he had a lot of bad news all at once. Ok I said a slim chance :).
    I personally lost a very large sum of money, but it could be a lot worse for me.
    I am certainly not a religious man, however my family and I are praying for everyone involved as I know many people have no where else to turn. Hang in there folks, we are in for a ride, but things will get better after all is said and done.

    ReplyDelete
  78. Enough information is out there to know it is a first class scam - there were no leases, just our money supporting a lavish lifestyle, a assumed stellar business reputation, and a store front office to launder the money under the guise of legitimacy. I think the Fresno employees of John Otto were being scammed too, but they had a responsibility to stop or report this - they had to know that what was going on was too good to be true, and they will face criminal charges, possible prison, and certainly monetary loss, as well as personal humiliation. When you associate with a crook like John Otto, you become a crook as well.

    ReplyDelete
  79. A leopard doesn't change his spots. He was caught doing the same thing 40 years ago. The FBI has this on file. He was a sociopath.

    ReplyDelete
  80. Has anyone started putting together a comprehensive list of investors with contact info? Or should we expect contact from the FBI, attorneys, or? I assume the FBI has lists of investors at this point.

    ReplyDelete
  81. Someone wrote that the long period of time that this went on was a good sign that this might be just a temporary glitch!!Madoff went on for 20 years without getting caught...

    ReplyDelete
  82. We need to contact trust Company of America to make sure they are not posting fees to our worthless accounts.

    ReplyDelete
  83. Finally, the Desert Sun has a story with picture of John Otto's house:
    http://www.mydesert.com/article/20090519/BUSINESS/905190308&referrer=FRONTPAGECAROUSEL

    ReplyDelete
  84. Mike Armstrong, Customer Service Rep, at Trust Company where some investors have their self-directed IRAs, says that upper management is aware of the problem with HL Leasing notes held in TCA IRA accounts. The decision to waive account fees has to be made by the executive board. Mike has no idea when they will meet next.

    Account fees are due in July. To contact Mike: 303-705-6434 direct, 1-800-223-4133, ext. 6434

    ReplyDelete
  85. Charles Schwab seems to be well aware of this as they removed HL Leases from my IRA yesterday. Didn't take them long to write off a bad investment.

    ReplyDelete
  86. Perhaps his daughter could shed some insight?

    952-843-8506

    ReplyDelete
  87. His daughter has been somewhat estranged and has not lived with him for many years and has no connection with this theft. She probably has already been contacted by the FBI, but she certainly has no idea about the money. Why would you bother her?

    ReplyDelete
  88. Desert Sun latest story:

    http://www.mydesert.com/article/20090519/BUSINESS/905190308/-1/rss

    ReplyDelete
  89. From that latest story, Callahan of Callahan & Blaine (HL's attorneys) says: “I've gotten the corporate documents now, and they're voluminous. I'll be looking at those over the next week to determine where the assets are,'' he said. “I feel confident we'll locate the money in the business accounts of the business.”

    Weird that a brand new firm was picked by HL, just days before Otto's suicide. Also the firm calls itself "California's Premier Litigation Firm", a different thing than hiring "California's Premier Lease Law Firm".

    How are Callahan & Blaine's fees being paid? Did Otto put some (or a lot?) of HL's money in Callahan's trust account? If he knew of an FBI investigation, is it even possible that Otto might have tried to put a very large amount of money in his lawyer's trust account to pay for lawyers in case his bank account was frozen? If Callahan and Blaine have some of HL's money in their trust account, is Callahan's "investigation" being paid for with that money? Who does Callahan report to, since Otto is gone? All are questions I would be interested in seeing answered.

    ReplyDelete
  90. Callahan is also the same person who said that Mr. Otto has never had any type of criminal activity or conviction in his life. He needs to do his research before making untrue statements.

    ReplyDelete
  91. Otto walked in ten days before, saw the leading attorney who turned him over to another attorney, who saw no
    list of investors, no financial statements, didn't know who the company he was buying, and his main job was to make a announcement Otto wanted to send look official. It was then typed on the law office stationary and given to Otto, who took
    it to his house office and sent it out. The firm has a retainer and when that is exhausted, their client is no longer alive so basically they are receiving free publicity.

    ReplyDelete
  92. Many thanks to Unfortunate Investor for starting this blog which has become a source of daily information and a way for some of us who are now in dire financial hardship to blow off steam. I am not only embarrassed I am very frightened about the future, and have no sympathy for Dan Ramirez who put us into more fraudulent leases a little over a month ago - and I could use that money very much right now. And at the end of last year when we tried to pull some money out of existing leases, it took several months instead of 2 weeks, with a story that the money was coming from an IRA and that's why it took so long.

    ReplyDelete
  93. Have never been able to confirm the criminal charges, by the way.

    Looking for an investor from the Palm
    Springs area to help out with some information.

    Please contact: kitmenkin@leasingnews.org or 408-354-7967

    ReplyDelete
  94. The FBI caught him in 1968. He did time in prison.

    ReplyDelete
  95. If you have an account with Trust Company of America, please call to put some pressure on them to hold off on the fees for the self directed retirement accounts until this is sorted out.

    When I spoke to Mike Armstrong the Customer Support person, he was very lackadaisical, unconcerned, and vague about when TCA would address the issue. You might ask him what criteria TCA uses when allowing companies like HL to offer their investments through TCA.

    Account fees are due in July. To contact Mike: 303-705-6434 direct, 1-800-223-4133, ext. 6434

    ReplyDelete
  96. I cannot find that in any records search, background checking, and the
    FBI cannot confirm that.

    If there is a web address where I
    can go to verify this, please send
    to kitmenkin@leasingnews.org

    ReplyDelete
  97. My family and I are yet another investor caught up in this mess. We only spoke with Dan Ramirez or Norma when we had questions.
    We first heard of Heritage Leasing back 20 some years ago. Dan Ramirez had come to the Bay Area (Calif.) to speak to the Plumbers Union.
    We never dealt with Jim Otto.
    Has anyone "googled" HL Leasing ? They are Incorporated in Florida???? What's that about??

    ReplyDelete
  98. He was a stock broker for Dain Bosworth in Minnesota. He traveled across the country getting people to invest. The people that did invest wrote their checks directly to him and not the company. The FBI caught him in Indiana and he went directly to prison.

    ReplyDelete
  99. Can trust Co of America come after us personally for fees? There is no money in my account to pay any fees. Paying fees at this time is adding insult to injury.
    I suspect TCA has some exposure here, both for failure to adequately investigate heritage Leasing before allowing the accounts to be set up and possibly for a claw back of fees received.

    ReplyDelete
  100. There are risks to holding money in a lawyer's trust account. In a totally unrelated story, it was reported that "Because (attorney) Kuehne’s trust account was used to temporarily hold the transfer of these funds to Black and because Kuehne drafted opinion letters attesting to the legal source of the funds, the government contends that he committed money laundering." http://lawprofessors.typepad.com/whitecollarcrime_blog/2008/05/government-retu.html I have no idea whether that is even correct, but maybe other people here have some information to post about whether this is even close to relevant to what happened here.

    Nobody seems to know if there even was a deposit into a trust account or if there was, which lawyer's account, so this is just a hypothetical question, but If Otto put a few million of HL's dollars in some lawyer trust account to prepay a defense in case the police or investors sued and froze his accounts, what is stopping any employee of HL from going to that lawyer and demanding it be paid out?

    ReplyDelete
  101. All the Heritage leasing offices were opened by ex-IFG officers, part of the
    Dain Bosworth Group. I wrote about that in the original story that
    Otto came from here. The other officers at IFG knew him well and he was active in leasing association conferences with them for years.

    I'll ask these people if they knew of any conviction of Otto,and if they did, I would be surprised why they would all be working together under
    similar company titles.

    ReplyDelete
  102. His wife knows.

    ReplyDelete
  103. Why would a big trust company like TCA accept unregistered securities from an entity without a license to sell securities? Am I missing something?

    ReplyDelete
  104. Otto never put any money in a trust account. Please see the original stories on this.

    A person who worked with Otto at IFG
    Leasing, was one of the head credit managers, said Otto: "
    Was never a stockbroker for Dain Bosworth."

    When IFG got out of leasing, the
    key people started their own affliation, working together, and Otto
    was one of them. If he had been arrested, served time, they would have
    known and never let him into the affliation.

    Right now all of this is heresay until
    court records or a public document shows otherwise. I searched the documents going back 50 years in the
    US, and states mentioned, and could not find any reference.Maybe I missed it, but don't think so. He also would
    have been investigated when Heritage
    Pacific Leasing applied for a license
    as a California lender.

    Again, show me some concrete evidence, and I will accept it.

    ReplyDelete
  105. I am very interested in participating on this blog. As you might tell from my "title" I am davasted. I am single middle age mom who has been unemployed for a year and a half with 65% of my cash assets and 100% of my retirement with HL. I am at a lost. Why can't all of us as a group with the Fresno attorney and then file a class action? I don't know if I'll ever be able to make the right decision.

    ReplyDelete
  106. I apologize, it was not Dain Bosworth, but Paine Webber. There was a warrant issued by the FBI because he was falsifying paperwork and kiting checks. Two FBI agents picked him up in Indianapolis after a tip off from one of his friends. They had been trying to get him for a month. He went to prison in Eau Claire, Wisconsin. He was also told he could never be involved in any type of financial business ever again.
    This is NOT heresay.

    ReplyDelete
  107. I heard yesterday that Dan made Two Million last year. That makes me even more angry.

    ReplyDelete
  108. john otto
    49355 Sunrose Lane
    Palm Desert 92260

    ReplyDelete
  109. Otto's address above if you want to write something to the rich Mrs. OTTO

    ReplyDelete
  110. I was looking under the wrong company
    about Otto, and now that Paine Webber
    will look further.

    I don't think it is Netequette to write Mrs. Otto. It is time to be an adult about this and start making a business decision.

    The person who started this blog has been giving some very good advice,
    and investors should be listening to it.

    ReplyDelete
  111. Saw post that HL leasing never had a "trust account" but I think that is a trust the way most people think about a "trust account", like a family trust. Still wonder about a "client trust account", which is a special type of account that lawyers have. If a client pays a retainer for future expenses, that money goes into the client trust account and is only withdrawn when the lawyer bills the account. So if a company was being investigated by the fbi or worried about investors trying to attach their bank accounts, they might put enough money to cover the anticipated legal fees into their lawyer's client trust account. Basically, think of it like a refundable "store credit" with the lawyer (with all kinds of rules and limits).

    It is all guesswork whether any law firm got a large retainer from HL. If somebody at HL thought it would take 2,000 hours of lawyer work at $500 per hour to do a case and prepaid it, well thats a million dollar retainer in the client trust account. I looked for articles about other companies with big retainers in client trust accounts, and here is one with a half million dollars http://www.metnews.com/articles/2008/sull041408.htm but that does not mean anything about john otto, HL leasing could be done in a total different way or not have a client trust account at all with any lawyer, its all guessing.

    ReplyDelete
  112. Leave Kathy alone. She did nothing wrong. Don't you think she is hurting enough??

    ReplyDelete
  113. Please don't leave messages protecting Otto's wife. This isn't the place to do it. I doubt she knew nothing while she benefitted financially throughout the years...enough said

    ReplyDelete
  114. You are right, I'm sorry.

    ReplyDelete
  115. Unfortunate investor; I'd like to thank you for giving us the venue to "discuss" what is going on. And more importantly what to expect. My wife and I have lost tens of thousands to what happened and don't know what to do about it. So having this is helping some and for that we are gratefull. I would like to remind everyone that we need to get all the facts straight before any one is hung. Personally I'm hoping for a positive outcome, it's the only hope I have. And in my mind it's worth holding on to.
    Kit Menkin; Keep up the great job you are doing. From the sounds of things we need someone like you to keep us posted of all the correct info. Once everything is out in the open those who did this to us will get there day!dj

    ReplyDelete
  116. If you did not have your money as part of an IRA, you can look into IRS code 165....check with a CPA or tax accountant. Take your investment, minus what you were paid out in interest. You may be able to consider the remainder as a tax deduction and recover 95% of the loss. You an go back 5 years and forward twenty years on your federal taxes. This is a new provison for Ponzi scheme victims related to Madoff....enacted this year.

    My husband and I had many hundreds of thousands of dollars invested, and may be able to recover some small percent of the money. I have been freaking out like the rest of you....but I must accept the reality, count my blessings, and remember to breathe. Losing sleep had not been doing me any good....the heart palpitations, guilt, stress had been making me sick....

    ReplyDelete
  117. Is it possible to reverse the order of the comments and put the most current first? Thank you for keeping this sight going. dc

    ReplyDelete
  118. I check this blog a couple times a day and want to thank you all esp you Kit...

    ReplyDelete
  119. I have been trying to cause the order of the blog to start with the newest commment at the top of the page but have been unable to find a way to do it yet. It is not a setting in the blog and I am researching on the web now. I will change if I can ever find out how. sorry

    ReplyDelete
  120. There was an alleged $30 million ponzi scheme run by Dennel Financial Limited.

    California's Attorney General accused Craig Allen Boone (see http://www.dca.ca.gov/cba/discipline/accusations/ac-2003-24.pdf) of taking "fees or commissions for sponsoring clients based on the gross dollar amount of investments in Dennel made by the clients he referred." (paragraph 16). In paragraph 22, the document says that Boone advised an investor, Mr. Bean, and "referred Mr. Bean to Heritage Pacific Leasing Company in which Mr. Bean invested about $200,000."

    The SEC sued Dennel and put it into receivership (http://www.dennelfinancial.com/), but apparently no focus was placed on Heritage Pacific Leasing. It is very frustrating that the California Attorney General went after somebody accused of taking commissions for putting money into Dennel's alleged Ponzi scheme in 2003, saw that the person was also recommending investments in Heritage Pacific Leasing, and didn't ask whether it might make sense to look into Heritage Pacific Leasing too.

    From that document, at least one investor, maybe more, might have been referred by Boone. For them, I hope this information is helpful. For everybody else, it is probably just frustrating.

    ReplyDelete
  121. The FBI agent on the case left me a message yesterday letting me know they are sending out a letter to all. They do have a list of investors. Most likely the letter is to confirm that it is as suspected a Ponzi Scheme. In order to file for revision of tax we have to prove it is a ponzi. We recently found banking information on John Otto (old but maybe valid) we forwarded that info to Fishbauch.

    ReplyDelete
  122. Another consideration...I have no idea how or who the FBI has on their list but apparently I was on the list and I hadn't contacted the FBI. Not sure if it was forwarded by the attorney in Fresno.

    ReplyDelete
  123. I talked to Mr Mc Cumin and he thought that Mr. Fishbach in Fresno wanted Ten Grand per person for a retainer. That is Not what Mr. Fishbach told us. The number thrown out was up to One thousand. It depends how many people are interested. I don't know where Mr. McCumin got his information because he has never talked to the attorneys in Fresno.

    ReplyDelete
  124. Mr. McCumin wants a simliar amount of money to hire a private investigator that he describes as someone who will sneak around at 3 a.m. to find out what he can about those individuals that ran HL Leasing. Has anyone else heard this while talking to Mc Cumin? and what are your thoughts?

    ReplyDelete
  125. I heard that there's a woman named Lynn that lived with the Ottos that kept the books....a quote from an employee stated "John keeps her close to his side as she knows all John's skeletons..." This was stated a few years ago by the employee.

    Find Lynn and you might find the answers.

    ReplyDelete
  126. It seems our little blog is getting a little more out there with rumors and while it is useful to share information it can also cause conflicting stories. My understanding, and what I personally relayed to Mr.McCurnin, is that Mr. Fishbach stated that his firm had already committed a number of hours in investigation and that totalled to approximately $10,000 in fees already having been attached to the case. This was what was said in the conference call. Mr. Fishbach indicted that the costs for the INITIAL work could be as little as $1000 per person, chargeable on VISA if you wanted too, depending on the number of individuals involved. Mr. McCurnin feels that an appropriate investigative effort be made in order to determine the correct course of action and in order to hire the Professional Investigation Company he recommends, there would be a cost ranging from $10,000 to possibly $20,000 depending on how the investigation progresses. Not suprisingly, Professional Investigators probably do tend to sneak around, at all hours, as you put it, as it is why we hire them. They would probably be relatively ineffective if they did not do a little sneaking. After the investigation appropriate legal action, if warranted and potentially successful, could be determined. Mr. McCurnin is not making a lot of money on this course of action. His method of operation is designed to cost clients the least amount of money consistant with the situation and possible results. Suing everyone is easy and only requires filing paperwork with the appropriate names on them and sending out billings to clients for work performed. While everyone wants to do something, and I realize trying to figure out what to do, in our current state of mind, with the limited information we have is difficult. Attorneys are required to move forward, like it or not, and attorneys are compensated for their time by clients. I realize that we don't want to throw good money after bad but each of us will have to decide how involved we want to be and how much determining if there is any money left is worth too us. I have talked to many individuals that have "everything" invested in HL and were living on the interest payments. They physically do not have a $1000 to pursue this and I understand. However, a larger number do have at least that amount to commit and will have to decide if they want to. The FBI is also good at sneaking around but have the added advantage of being able to operate out in the open. However, they will not be sending each of us a report on their findings and they are focused on determining criminal activity and providing their input to the appropriate authorities for prosecution. Their focus is not on "is there any money that we can recover for the investors?" While this may be a by-product of their investigation it is not the focus. By contrast the Professional Investigators SNEAK AROUND with the intent of finding the money and are not focused on building a criminal case. Putting Dan, Andy, and Kathy Otto in jail, while maybe satisfying,does not get us a nickle. Please contact me directly if you would like to discuss options.

    In regards to the individual referring to Lynn, there is in fact a Lynn and for those of you that received your letter from Callahan via email you will note that the sender was LynnH. She is a long time "assistant" to Otto, apparantly going back to the mid 90's, and did work with him at his home office. I am sure the FBI is aware of her and can't imagine they have not talked to her. I can assure you that I know for a fact that others investigating this have spoken with her. The same investigatie efforts also revealed that Mrs. Otto, until a couple years ago, was involved in the day to day operation of the business out of the Palm Desert home office. This did not even require any sneaking to find these things out.

    ReplyDelete
  127. Latest news:
    DesertSun:
    http://www.mydesert.com/article/20090520/BUSINESS/905200320/Investors+waiting+on+results+of+FBI+Ponzi+investigation

    Leasing News:
    http://www.leasingnews.org/#notlicensed

    Related story:
    http://www.leasingnews.org/#77million

    In this story, the Madoff trustee is suing a fund that received a return from Madoff:
    http://www.nytimes.com/2009/05/19/business/19madoff.html?_r=1&ref=business

    In the Leasing News story, the receiver has the ability to seek return of interest and principal provided investors by HL Leasing, as well as civil lawsuits also have the ability to sue, too.

    There most likely will be many groups represented with their specific attorney's direction and time is of
    the essence. Once a public direction is taken, the time line will begin and most go on for five years or longer and whether investors will ever see any money will wait that term, as well as investors may be invited to return interest and principle they received---Right now
    it appears it will go into receivership, but that does not rule
    out civil and bankruptcy attemps, or appeals.

    ReplyDelete
  128. I am one of those lenders along with other family members who basically lost everything in this scheme. We can not afford to participate in any legal action at this time, however are at a loss as how to proceed from this point on. Assuming a Recievership or Involuntary Bankruptcy is going to happen, it seems that attempts for individual civil claims for unsecured creditors are at the bottom of the list. There is no assurance that there are any assets from HL Leasing and attaching any assets from Otto's estate, other businesses, or from Ramirez and the other principals is not guaranteed and will necessitate litigation. In other words, the hopes for any monetary recovery are very slim. Granted there may be some tax benefits.

    I haven't recieved any correspondence from the FBI or California Dept of Corporation, and wonder if a claim should be submitted, just to simply get on record. The thought of potential future claims against lenders for money received from HL whether return of principal or interest is frightening, and may require legal representation, however right now many of us have the priority of simply trying to survive.

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  129. I spoke with Karen Patterson, the attorney for the CA Department of Corporations yesterday (tel: 916-322-6737) and she recommends that everyone involved file a complaint using their complaint form which may be found on their website or using this link (if it works)

    www.corp.ca.gov/ENF/complaint.asp

    The link above has the correct address but you may have to copy it and paste it into your browser. In any event you may call her at her number but she is just getting involved and has little information to share at this point.

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  130. I have read the comments on possibly having to returning principal. My goodness what about all of us who have been investors for years and rolled over all the principal and interest? There is no way...that money is gone. I would like to see those that got paid earlier than the maturity date return principle especially for those of us that we are due principle back NOW...
    I realize that isn't going to happen but thank you all for the information and support

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  131. new info

    http://www.fresnobee.com/local/story/1418663.html

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  132. Thank you to "Unfortunate Investor" for creating this forum. One suggestion might be to create a couple of additional blog entries for people to share specific types of information. For example, one for links to news stories, one for links to people sharing leads on where Otto's assets might be found, etc. At 138+ comments, this single entry is going to start to get hard to navigate.

    Here are two links, but I don't know if they are the same John W. Otto.

    http://www.secinfo.com/dsVsj.67v.d.htm A "John W. Otto" appointed as "lawful attorneys-in-fact and agents" for Chase Manhattan with regard to sale of some bank assets. Not at all likely to be the same Otto, but does it ring a bell for the leasing business insiders on the blog?

    http://marana.com/DocumentView.aspx?DID=1712 (see line 1243 on the 2003 sheet of the spreadsheet showing property purchase in Arizona)

    This link is Air Fred. Its been mentioned a lot but here is a document connecting Otto to Air Fred
    www.aviationresearch.com/CHEQOnline/dynLogo/entry.asp?CID=nXkZ_WWhbWoPPSOnFHKGo&m=v

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  133. My apologies. The Air Fred link was bad. Here is the good version:
    www.aviationresearch.com/CHEQOnline/dynLogo/entry.asp?CID=nXkZ_WWhbWoPPSOnFHKGo&m=vIn case that link doesn't work for you, you can also search google for "FZ0A otto palm springs" and the document will come right up.

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  134. Most of the assets are in Otto Trust. The two planes were financed, and not much equity in this marketplace. Air Fred was not
    successful, a small charter company affected by the economy.

    The Florida filing is not correct. Incorporations of the two leasing companies is in California, both do not appear to have much value left.

    It appears various groups are going in their own direction. Not much else to report.

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  135. Not surprising that the charter company wouldn't have assets let of financing. It is apparently currently operating charter flights, including one today. See http://flightaware.com/live/flight/N725CC. For the sake of the passengers, I hope the maintenance records Otto's for charter airplanes are legitimate. I wouldn't want to be on board on of those flights. Photos of one of the airplanes Air Fred seems to own are here http://images.google.com/images?hl=en&um=1&sa=1&q=n725cc&btnG=Search+Images&aq=f&oq=

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  136. My name is Ashley, I was mentioned in the article in MyDesert Sun. Anyways, my step father of 20 years being my step father, passed away in early April 2009, had invested everything that I had recieved from my dads estate and social security every month since 2002 up until April of 2005. So roughly around $35,000. Well I had alot of trust in my step fathers decisions, and most always took his advice and suggestions serious. I was going through some papers yesterday, and he recieves 15,000/month on 2 seperate loans with HL. Correct me if Im wrong but that roughly around what? 1,500,000.00 isnt it?! Anyways, thats neither here nor there. Craig Boone whom which was my step dads accountant, and had been for years and years, I am almost sure recommended HL Leasing. So after my step father passed I had contacted Norma, who then directed me to talk with Dan. While talking to Dan, talking with Dan, and explaining to him my financial state with my step fathers death, he was telling me about his sisters death and NEVER ONCE did he say to me ANYTHING about John Otto being sick, and then 2 weeks later he contacted me and informed me that the draw I was requesting was in the mail. A week later still no check. I then contacted Dan in regards to not recieving anything and he informed me that everything was frozen until May 8th. He sounded alarmed and clueless. Like he didnt even know what was going on! So it was just COINSIDENTLY one thing after another, one step closer each time in screwing us, this whole thing is just sick. And Dan and Norma and all other involved, IF involved at all. They obviously had just as much faith and trust in Otto as the rest, only difference being they are left to explain to us, not us to them! Sorry for rambling on, I just thought I would throw my story out there with the rest. You are all in my hopes and prayers.

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  137. I posted earlier about Craig Boone (see link here). Craig Boone was the subject of a CPA license revocation proceeding because, among other things, he allegedly got kickbacks for telling clients to invest in a different illegal ponzi scheme (the "Dennel" scheme). The documents showed that the California Attorney General also knew he was recommending HL leasing 6 years ago but apparently they didn't look into whether HL was also a ponzi scheme.

    If you are ok sharing, when did Craig Boone last act as an accountant for your step-dad? If it was after his CPA license was yanked, law enforcement might be quite interested. If he was getting kickbacks for investing that money in HL, I can't imagine he wouldn't have to pay that back to the victims.

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  138. Fresno Bee latest story:
    http://www.fresnobee.com/local/story/1418663.html

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  139. I find it a little strange that nobody knows, including the FBI, who the potential buyer of the company was.
    On another note, Mrs. Otto and Lynn are not cooperating with the FBI in any way.

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  140. There was never a potential buyer for the company, what was there to buy? The leases were did not exist, and this report of a buyer was simply a delay tactic. Perhaps it gave Otto a little time to hide some money, but finding this out is not easy. Mrs Otto and Lynn are 'lawyered up' and trying to protect themselves from criminal and civil action as well as protect any assets.

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  141. If anyone is interested in joining the group who is pursuing legal action through the attorney in Fresno needs to get in touch with them. Please know that the rumors going around about them hitting us with a large retainer is just that a rumor.

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  142. There was no buyer. It was a hoax.
    Interviews with the attorney by myself
    and by the person who started this blog tell a completely different story from the attorney story that is being passed around today.

    There are no assets in HL Leasing. It was a shell. How can you sell a shell? Heritage Pacific Leasing was hurting for three to five years, and basically was closed down in 2007, and
    the sales list/vendor list and residuals were what was for sale. Since then, the vendors left, the brokers left, 2 1/2 years less of residuals, and a staff paid by residuals, there is not much left for sale that anyone in the leasing or finance company would want, especially
    in this economy when many are going out of business, banks getting out of leasing (35 have left the last years) and 40 have exited taking broker business.

    A two plane charter business in this
    economy from Palm Springs which has quite seasonable business, owing debt.
    As most of the major airlines and smaller ones, they have been losing money.

    There also was not any money to hide as the principle was making the interest payments at HL Leasing. With no more principle coming in, many investors wanting their principle returned, there was no cash to make interest payments. Otto took a gun to his head as the end had come.

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  143. As Director of Operations for Air Fred, I feel compelled to respond to some of the misinformation contained in one of the "anonymous" comments. Air Fred is a seperate legal entity that shares nothing with HL Leasing other than the fact that both companies were owned by the same person. The employees at Air Fred are highly qualified and highly trained with many years and thousands of hours of experience. We are closely monitored by the FAA and maintain Argus Gold and Wyvern safety ratings. Our aircraft are superbly maintained and fly with zero maintenance items. Only one of the aircraft, a Citation II, was owned by Otto. The other aircraft is leased, managed, and operated by Air Fred. We continue to fly, as instructed by legal council, to fulfill our contractural obligations. After that, I am sure we will be instructed on how to proceed. Air Fred is a clean, well managed company that generates its own revenue, pays its bills, and will probably end up entangled in this web along with the HL investors.

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  144. Hi from gshnfresno,

    Here is the lastest update from Fresno attorney Donald Fischbach. I realize there has been some confusion and speculation on Mr. Fischbach and his firm. I attended the initial investor's meeting, and from the beginning the fee has always been estimated to be about $1000.00 per investor. His firm, like the firm in So. California has devoted a tremendous amount of time to research. I have not decided whether to participate or not yet. Someone wondered how Mr. Fischbach initially got involved. He has a friend and neighbor that contacted him prior to the voluntary meeting Mr. Fischbach had with his client, Dan Ramirez, and Andy Fernandez. This has been evolving ever since that meeting. There is lots of information out there, some accurate, some pure speculation. If you have more questions concerning some of the events prior to the initial meeting or what was actually said at that meeting this is a great place to pose them. Personally I have been involved with HL Leasing for 11 years. Good luck to us all, looks like we will definitely need it, gsh

    UPDATE FROM DON FISCHBACH:

    We plan to have our representation proposal and fee agreement forwarded to you on Tuesday. We continue to be contacted nearly hourly by additional investors who want to become involved, and we need to make sure how many will be joining us before sending the proposal.

    In the meantime, we will continue to work with the FBI regarding its investigation, as much as possible. We have also been advised that the HL Leasing office in Fresno has been secured, meaning that documents, including computer systems, are being preserved. We are in the process of attempting to have that be done with respect to Mr. Otto’s office at his home in Palm Desert. We have contacted the United States Attorney’s office, requesting their assistance to help secure documents, and hopefully, assets. We are also consulting with a Ponzi scheme asset investigative specialist who has previously handled a number of these kinds of cases.

    In addition we have learned that rumors are going around that we will be requesting $10,000.00 per investor, which is not true. Our proposal will not request more than $1,000.00 per investor. Thank you for your patience. We will be in contact.

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  145. Last year when banks were starting to fail and bailout requests started coming in my wife and I got pretty nervous about how we were still making 9% and everything else in the WORLD was failing. These loans are for medical equipment and doctors and dentists will always have work, so they will always pay their bills, we told ourselves. Then we called Dan R. and expressed to him our concerns over the failing economy and should we pull out our money. INSTICT, MAN I SHOULD HAVE ACTED... Dan told us HL was having the best year in the history of the company. He told me that with the banks failing and real estate already gone, people needed a solid investment and they were coming to him hand over fist. He said they had brought in their biggest year yet at over 35 or 65 million, can't recall which, but that they were in a better position than they had ever been. Then we received the letter about the last remaining notes to be sold at 9%, then most would go to 7%. THANK GOD WE DIDN'T PUT MORE IN.

    Fast forward to December/January and I'm now fealing a kick from my instinct, saying get out, I put Dan's business card on my keyboard in my office and decided to just keep tabs. I'm not a micromanager, so I didn't call him until we got the letter saying payment would be missed for the first time in 30 years. Wife and I had a conf call with Dan that lasted about 30min where he told us how upset he was with Otto not telling him about the sale of HL Leasing... until he supposedly talked to his CPA/Attorney and he was told it would have been insider trading. We specifically mentioned Madoff and how we were nervous that something bad was happening and he said look don't worry it's not good for you, just relax and when the deal is done, we'll all be able to stay or go.

    Go, go where Dan??? To hell? My kids college funds, my wife and I's retirement... GONE? NO, THIS CAN'T BE... I have penny pinched in every bit of my life so that I can provide for my family. Brought my lunch, bought used cars, used clothing and have always been looked at as the guy who is just to cheap to do anything. I've never gambled or taken risks. Spent more time researching HL then all of my other investments throughout my entire life. People I spoke to... well you all know the stories, but FOR WHAT?

    So someone like John Otto and the ones closest to him can live the life that we only dreamed of! No worries of gas prices or making your mortgage!

    God PLEASE help us!

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  146. I am John Otto's daughter and I am certainly not living the life that we all dream of. I too drive a used car, I bust my butt every day to pay the bills, I don't take vacations, I don't buy expensive things, I can't even send my kids to camps this summer. After all of this, I can't even eat or sleep.

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  147. Back to you "GOD PLEASE HELP US"..everything you just said in your comments were the same for me, I called Danny multiple times about this sale as he indicated didn't know, he gave me John's cell number of which I did call and spoke to John (asking those same questions over and over. He was a bit incorherant with
    drugs and a lot of excuses that went on and on, I was extremely firm about Dan's knowledge and what was he doing to our life savings? Dan even called me three times that day to ask what John had said. I asked for answers and told him my life savings were given to him and what was he going to do about the Investors, and then ask why Dan did not know about the sale. I also was firm about this sale and that I didn't believe the excuses he was giving. So, Now with the smoke settling, Dan gave the same line to all of us.not to worry that the new company will either pay us off or continue to pay us until our notes were due, he said repeatedly he had over $1M and Norma had over $600K, of their own funds invested, even Danny calling me that Thursday before the suicide at 9 am to say that John told him that disbursements were to be made that day no matter about the sale to all of us. Of course calling my bank that Friday am , no funds were received, My calls started again that Fri/am but Dan or Norma or John would not return emails or calls. Now it is extremely necessary that they must be held accountable, his millions or not, will be spent on attorney fees, etc. He also told me that he and his son were buying properties in Fresno as specs and turning them over and making money. Maybe the attorneys can look into those assets. If his income from HL were used and they made profits, maybe those homes can be seized. He told me he bought those properties with him son for cash. (he said thanks to HL income)His son fixed them and flipped them and they split the profits. The son apparently was in the contracting business and they were partners. now I don't know that as a fact but in speaking to Danny many many times over the past few months that is what he indicated. Maybe someone has friends at title company to pull county records to see what is owned by him and his son.
    A good place to start. I again express my regrets to all of you involved in this nightmare, I myself have lost almost a million dollars too,(which was my life savings) so rather it be $10K or $900K it is still a loss, a hardship, there is alot of anger but lets have some compassion for ourseleves thru this, we are not wrong, we were believers into a company and persons that lead us a wrong direction...we were trusting and now one of those victims of some very bad human beings. I wished I could say I wanted John to rest in peace but right at this moment I can not.I do send my warmest heartfeld aloha to each and every one of you. There will be some tax ramifications from what I am findings for all of us down the road. That info will come in time. God bless you all, prayers always to follow /

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  148. To Johns daughter, from what we all know now you are not involved in this nightmare your father and others created. I am sorry for your loss but does not your mom/or step mom Katherine have some sort of comments or really committments in this . I am sure her attorney tells you all not to speak, enough already.. your father and his staff have done things that will and are having LIVES torn apart. You are not to blame I am sure and you are writing to all of us is a nice thing to do, but you really could help by getting some info/your mom or step mom to come clean...She had to know something and they do have assets so Johns daughter, this may be hard for you to lose your dad but unfortunatly your father was a bad man that now has change my life and many others forever. If you can help anyway by getting information to the FBI or doing anything you can , that should be a mission for you to help us., find some resolution to this great nightmare he did. we can thank you if you please would help us

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  149. I am on a mission.

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  150. ALOHA we can help you it is easy to do I just got your email are you in now?

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  151. Call Otto's daughter and tell her how she can help. Her number is posted on here somewhere. I'm sure if some people have harassed her, she may not answer but it's worth the try.

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  152. I for one am not opting for an attorney, why? I am filing my complaint w/ corp.ca.gov (thank you)and with the information everyone has been providing on this blog I'm feeling that this is enough for now. oh and plus I had every fricken penny I have invested in HL, thank you Dan.

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  153. I am having an emotional day. I am worried that now I am going to loose my home. I lost my life savings with HL over 700K and believe me I have had the EXACT conversations with Dan over the seven years of knowing him. Thank you for your sharing it helps to know I am not alone in the pain...I am scared.

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  154. At least 2 other investors I know personally have had the same conversation with Dan, plus I got a reassurance letter from John Otto on Jan 20.

    We all need to file a complaint with the State Dept. of Corps. I am also going with an attorney to search for whatever other avenues/relief there may be.

    We are all in the same leaky boat. Focus on whatever realistic solutions there may be and stay well.

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  155. This is very similar to how many investors put their money in HL Leasing. You should talk with a professional on what is the best approach for you and its consequences.
    You should not listen to me or to anyone on a blog or do exactly what
    you originally did when you invested
    in HL Leasing. You need to seek out
    a professional, pay for their time to
    give you some options, and then make a decision. Listening to what another investor is doing is
    exactly what got you into this mess.
    See your family attorney, your business attorney, or get recommendation. Many attorneys will
    give the first session for free, as
    your goal should be what is best for
    me---sitting around and waiting is not, nor filing a complaint to appoint a receiver who may not have
    your best interest---seek legal advice
    not what another investor is doing!!!!

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  156. Someone please help.

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  157. I just don't think there is any money to even go after, plus I just don't have the funds for an attorney, so what does someone in my position do??

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  158. If you are a member of AARP you can go to the web site www.aarp.org/lsn and find an attorney in your area. You are allowed a 45 minute free consultation and a 20% discount on many legal services. I know because I contacted them, unfortunatly there isn't one that can help me close by so I'm still looking. There are also support teams with AARP but you will have to search what they have to find what suits you. But they have a data base worth looking at. Good luck.dj

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  159. The comments from the Director of Operations of Air Fred are interesting yet skewed.

    Tell us, who issues the checks for employees of Air Fred? The checks are paid from the Heritage Pacific Leasing payroll account. Who paid for the maintenance? John Otto himself. Seems to me to be a closer relationship than you are claiming.

    As far as I'm concerned, that jet aircraft should be liquidated and used to pay back as many investors as possible.

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  160. Most cities have free legal organizations that you may utilize,
    as well as the local bar association.

    Most attorneys you will call will give
    you the first hour for free, or you can ask for two hours of their time and agree to a price in advance. You
    may not be hiring them, but you will
    learn what your personal options are,
    not mine, not another person's, but yours.

    All this game playing may be good for
    the emotions, but is spinning wheels.
    Save these last two emails for two,
    maybe three years, and then go back to it...I have seen this all many times involving leasing companies for
    almost fifteen years as an editor, and
    38 years being in the leasing business myself.

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  161. Air Fred was never intended to be a profitable, stand-alone business. It was a way to 1) provide John Otto with a jet so investors would think his company was successful, 2) provide a job for Sharlene Cross and 3) provide a write-off for Heritage Pacific Leasing's profits.

    That jet is worth at least 2 million dollars, even in this economy. I'm shocked they are still flying the aircraft in light of what has happened here. SHAME!

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  162. I, like you, have lost a large sum of money thanks to a bad investment desision. I like you am researching everything I can to know everything there is to kI, like you, have lost a large sum of money thanks to a bad investment decision. I, like you am researching everything I can to know everything there is to know about this mess. I, like you am very great full this blog was set up.
    And I like you am looking for an answer to the question, What do I do now?
    In my opinion there is no right answer, and no wrong answer at this point in this case. Until we find out where the assets are and how much they are worth we will not be able to plan any approach to get it back. Both lawyers this group has undoubtedly heard of have advised us of this very real fact.
    I understand and respect your opinion if you believe there is no money here. You may be right. I honestly believe there is money somewhere. There is money, as there are parties guilty of civil fraud and criminal larceny here. My guess is it is only a fraction of what is owed but there is money. The key for us is finding out if there is any and then planning a course of action to get it back. Unless you have Otto's books, bank statements and contracts in front of you, you cannot know anything. You can only have an opinion.
    To me getting my life back on track is important. My family especially my kids are depending on it. So this what I'm doing.
    1. I'm planning to move on and learn from this.
    2. I'm planning to take a hard look at what I have and be happy I still have it.
    3. I'm planning to look at what I need and make a plan to get it.
    4. I'm planning to work hard to get what I lost back from HL or whomever has it. I'm however not counting on anything from this HL case. This money if gone, and there is little chance I'll see it.
    5. I'm still deciding if I want to get an attorney, but at least today I feel that I may.
    6. I plan to file the complaint to the State.
    7. I plan to continue to read this blog.
    8. I plan to continue my research into legal approaches and all aspects of how handle Ponzi schemes.
    9. I'm going to ensure I never invest in high risk instruments.
    10. I will not let any SOB ruin my life. John Otto took my money, but I'll be dammed if I'm going to let him ruin my life. My life will never be measured in dollars.
    BTW I'm not Dan Ramirez or anyone who caused this mess. I'm just a trustee for my late mom's family trust who was invested in HL.
    now about this mess. I, like you am very greatfull this blog was set up.
    And I like you am looking for an answer to the question, What do I do now?
    In my opinion there is no right answer, and no wrong answer fo rthis case. Until we find out where the assets are and how much they are worth we will not be able to make a good plan we can execute. I understand and respect your opinion if you believe there is no money here. Yopu may be right. I honestly do not believe it. There is money, as there are parties guilty of civil fraud and criminal larceny here. The key for us is finding out if there is any and then planning a course of action to get it back. Unless you have Otto's books, bank statements and contracts in front of you, you cannot know anything that is important to us the investors. To us getting our lives back on track is important. and getting at least some of the money back wil

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  163. There is money.

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  164. Our family was and is also an investor with HL Leasing my mom is 83 years old and was putting what small amount was left from savings after my fathers death. she needed the additional funds to live on. my heart hurts for her and all involved. I too recently lost money and it was in my retirement program at work 401k due to the stock market, I can sue for that like everyone here is talking about doing, I can't go and file claims with the FBI, Law firms, and/or this new agency that is being written about today in this blog. I do not know what advise to give my mother but to file the claim with State of California Dept of Corporations, three attorney's all told me that there is most likely no hope of getting any money back. If assets are found they will be eaton up by attorneys fees. We had that happen three years ago for my grandmother who was defrauded out of $200k after 10 years in courts, her passing away, my father (her son) passing away the judgement came in and monies were dispursed to those on the class action law suit two years after that her estate was given $4,000.00 let me repeat "Four thousand dollars" out of the Two-hundred thousand dollars that was the original scammed from my grandmother, WHY, the judge awarded the largest portion of the funds retreived to the attorneys to pay for their fees. SO WHAT DO I TELL MY MOTHER?

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  165. As for the comment about "provide a job for Sharlene Cross" I know her personally and she had a job working at Fed Ex as a driver when John came to her.

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  166. God PLEASE help us!!!May 22, 2009 at 8:37 AM

    I've never wished ill on anyone, so I will assume your father dooped you as well or you were estranged from him during all of this. Were you invested in HL as well? Other than John being dead now, where is your loss that has caused you to not be able to send the kids to camp or eat? One more thing my children never had btw.

    Don't want to make this a pissing contest in anyway, so how can we help eachother, needs to be our conversation... do you believe that your father was running this alleged Ponzi scheme? If he was not spoiling you, his own daughter, was he an honest man or just that horrible? As we all read into these multitude of articles about so many horrible people destroying so many honest peoples lives, we are so amazed at how heartless humans can be, but can you give us any grass reed of hope that this was not the case with your father?

    Kit, I read that if/when any monies are found we will be the last to see any of it. So other than 5yrs back and 20yrs forward on our taxes (which I heard is limited to 3K per year)... with your years of experience in this kind of thing and the new Madoff laws/rules coming in, do we have anything to hope for or is there no hope and we just need to except the fact that we will never recoup a dime thru ANY means?

    Also, if the worst is true and they have done these things to us, are the employees, widows... being held without bail? Are all of their possessions being frozen and held or are they just continuing to spend and travel to beautiful parts of the world on their accounts?

    Dan, (give us an initial to refer, too familiar ;) ) I love what you said in comment #10... I haven't felt like such a helpless child in all of my adult life, but you are right sir, we will NOT allow him to take OUR lives!

    Ah, and here here to the beauty of the internet and information sharing!!! Imagine going thru this 20 years ago...

    God PLEASE help us!!!

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  167. I have been estranged from my father up until 4 years ago. I had no idea what kind of business he ran other than it was a leasing business.
    I don't think I said that my kids can't eat...I did say that they couldn't go to camps this summer. I said that I work hard to provide for my family and that things are hard right now. I did not get money from my dad, I work an honest job and things are tight for us.
    I was not spoiled by my father and did not benefit from HL leasing in any way shape or form.

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  168. Assuming you've been talking with your father over the last 4 years, it would be very helpful to know where his travels took him over that time. If he was running a legitimate business, that information might help to find the assets and show it was legitimate. If it was a ponzi scheme, it would help the victims locate any assets he hid overseas. There was a rumor he flew regularly to the middle east. Did he ever fly to Malaysia?

    Do you remember any countries or cities he regularly visited? Do you remember any specific trips? Within the USA I would hope the FBI will be able to find assets, but knowing what other countries he visited will be critical to figuring out whether there were assets hidden overseas. A lot of people are assuming it was a criminal thing because nobody knows where the assets are and it looks like they might not exist. Anything you can provide about your dad's travel and business connections would be very important.

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  169. "It looks like that they(the money) might not exist)"!

    COME ON -GET THIS FIRST AND FOREMOST: THERE IS NO MONEY..If you can grasp that and you GET that once and for all you can then make better, correct sophisticated decisions. My prayers consistently go out to you all,but remember we are here on earth to serve.

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  170. I am one of the lenders who has not yet signed on with either of the attorney groups. Not because I do not want to, but simply because I just do not have the money - the $1,000 will help pay my mortgage for another month. From what I have read both attorneys are qualified and on the same path, and I think Fischbach initially got 'bum rap' with the misconception of a $10K retainer per lender. I take exception to Kit's comment to see your family attorney or one from AARP as this Recievership/Involuntary Bankruptcy is a very specialized field.
    My question that I hope one or both of the attorneys will respond to is: Now with the Dept. of Corporation participating, some sort of Recievership may be inevitable and I agree there will be some assets(but small compared to the total loss) located. How can legal representation in one of the groups assist me more than any plan of distribution set up by the Reciever. Will not this Recievership have priority over any private legal action e.g. suing the principals of HL,the Otto estate? I think this may help a lot of us decide if we can find some money to participate.

    In my situation, my family including wife, sons,brothers, 94 yr. old father have lost $1M - a huge amount of money and for me, my income as I am out of work and 60 year olds are not a prime commodity in the present job market. I have started cutting expenses as much as possible - cancelling cell phones, cable tv, club membership, lowering limits and raising deductibles on insurance, etc., and am planning to sell my house and hopefully find a job. These are not good times for many of us.

    John Otto was obviously a thief and a coward - he killed himself rather than face us and the consequences, and he certainly left his wife and employees in a bad position. I do not know if his wife knew that his business was a fraud - it is possible that she did not, and I think Dan, Norma, Andy were somewhat in the dark. However they were in the business and reports that there may never have been any leases is not in their favor. They had the resouces and responsibility to check out what they were selling, yet when you are being paid huge sums of money, you don't want to rock the boat and question 'The Great Mr. John Otto'. This will be what their attorneys will be trying to prove - that they had no way of knowing there was fraud. We like many others heard the constant Danny R. 'song and dance' about how good this was and the 'BS' about this is the end of the 9% money. Well the 60K that we scraped together in March was stolen too, and I'm sure he got his cut.

    On possible tax benefits the IRS has issued guidance on how to handle possible investor losses. There is a Revenue Ruling 2009-9 and a Revenue Process 2009-20. you can read these at
    IRS.gov and do a search for Ponzi. Basically these are considered Net Operating Losses that can be carried back 5 years and forward 20, the carryback can be elected out of, and there is no 3K yearly limitation. These are complicated tax adjustments - you will need professional guidance, and at this point there is uncertainty as to how the various state tax departments will handle this. If you paid a lot of taxes previously and will in the future, these new rules will be of more benefit to you.

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  171. HL Leasing going into Receivership?
    by Christopher Menkin
    http://www.leasingnews.org/#hlleasing

    No other current stories found.



    Each investor may have a different interest and should consult an attorney to learn their options and what is best for them. In this blog, one investor told you her experience with a Department of Corporation Receivership that after all the time
    involved, she basically received nothing, that the attorneys got most of it. And the longer it takes, the more attorney meetings, and the more attorneys, the more the meetings, etc.

    An investor on this blog asked me if I thought there was any cash.

    I don't think John Otto's estate has much, and there may be some real property in a trust. I think eventually all those involved in the scam will make a plea and/or
    be found guilty in a court of law.

    I don't think there is any cash left.

    There appears to be a Ponzi story every day, the latest a $200 million
    one in California Wine Country with 2,000 people, many losing their life savings. Ponzi scheme always run out of money, some last longer than others.

    This is why I don't think there is any cash in the HL Leasing Ponzi scheme:

    Interest comes from the principal. There was no income. So if you received 10% a year or thereabouts, it would take a little over nine years just to run out of principal. Investors 15-20 years were getting interest off new investor's
    principal. These compounds, meaning the person in nine years and the new
    investor are getting 20% a year. So this lasts five years. You compound
    this again and you see that the time period keeps getting shorter, no
    matter how many new people put in principal. Worse, when they pull
    it out of the equation. So if the economy turns around and the
    principal is getting less, not more, as it needs more compounded each year, in fact, each year has to be higher than the last year, the scam goes rapidly in the other direction.

    Add to this a year operating expense for employees to do billing, paperwork,for officers to receive a salary, bonuses, commissions for officers and those that refer business. This comes from the principal. Remember, there is no income but the principal. Now add in the profit to John Otto, what he takes as salary, commission, expenses. Whether you call it operating expense, it is deducted from the principal as each year interest is deducted.

    So you have the principal requiring more principal each year, compounding,
    as well as the operating cost, meaning salaries to Dan Ramirez, et. al.,commissions, and this compounds. It reaches a mathematical reverse, and usually this occurs when an outside economic effect happens, meaning not more principal each year as more and more is required, but a reverse.

    Here you have John Otto out of his other investments, looking for cash
    since 2007, cutting back, putting whatever he can into HL Leasing, and hoping the economy will turn. He is drinking more, stressed out more, and in a desperate measure, since he has been lying most of the time, tries another stall--- but it panics the investors, doesn't give him more time, and he realizes he is about to be found out, the FBI is now on the case, Leasing News has written about what investors explain are “American Express leases… and the investors will be very disappointed, to say the least, as well as his long time colleagues in leasing, his neighbors, his friends, his country club golfing pals: there are no leases, this is a shell, and he leaves the house
    for one last lunch with cocktails…taking a revolver with him, which afterwards he puts to his head in the parking lot.

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  172. That about sums it up. Thanks John Otto for being such a selfish a-hole. I hope he burns in hell with the rest of his cronies!!

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  173. There is a posting on leasingnews saying "The major problem right today appears to be what got investors involved with HL Leasing in the first place, they are listing to each other on what to do; not consulting an attorney or other professional who can best give them alternative action to take that is in their best interest."

    First off, this isn't legal advice or accounting advice, so don't take it that way. But let me make the counter-point: People invested in HL Leasing on the advice of professionals like CPAs (for example Craig Boone). A common element of any Ponzi is that people give money when they shouldn't, and often initially rush into it because they are afraid that if they wait, they will have their savings sit at 1% and lose out on great returns. So rushing to pay a large retainer to a lawyer or CPA because of a fear that other investors will "get the jump" on them is also something to be wary of. People hiring lawyers need to have that lawyer explain how the retainer will help them recover money that they would not otherwise recover if they waited until, for example, a receiver was appointed.

    I am not saying to stick your head in the sand. Investors should see an attorney, in fact, should talk with a couple of them. But know that the attorneys who make their living on these kinds of cases will normally talk to a potential client for an hour, maybe several hours, without charging anything. There is a lot of money to be made prosecuting investment fraud, but the way the lawyers who are experts in this area make money is by talking with a lot of prospective clients, and honestly telling most of them "I wish you the best, but I don't see where the deep pockets are, and you've lost enough money already." The clients who identify a deep pocket get an explanation of how their fees will help them recover. Those clients who are told "you've already lost enough, I don't want to charge you money to chase down assets that likely don't exist" know that the lawyer is looking out for them, they get direction from the lawyer, and they know exactly who they're going to come back to if somebody with deep pockets is located.

    Think about it like this: When you are figuring out whether to hire a lawyer in a Ponzi case, you should be able to watch the lawyer painfully struggling with the ethical issue of "am I going to help this client, or am I just going to get them to borrow money from friends and family in order to pay me for services that are not a value-add for them?" Most of the investors have lost enough money already that it just shouldn't feel right taking more without a solid plan to get them results they would not otherwise have. A doctor who sees a patient who has terminal cancer and only 2 weeks to live would NEVER recommend and charge money to the patient to undergo bariatric surgery, or for a face lift, or for some other kind of elective surgery. Same thing here. It isn't to say that a lawyer wouldn't help, it is entirely possible that they could be crucially important. Just make sure that the lawyer understands and can explain to you how your "investment" of legal fees is expected to generate a net positive return.

    (continued in next post)

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  174. (continued from prior post)
    The way the ponzi aftermath normally goes down is that there is a bankruptcy or a receiver, and it is the government that chases assets at the government's expense (or using money in the bankrupt entity, its complicated). Fresno is not a financial capital like LA or NY, so naturally there are not a lot of people here who work full time investigating investment fraud. People may be able to find a Fresno lawyer with excellent financial fraud, bankruptcy and receivership experience, and lawyers without that experience could be a good fit for some people. But don't feel stuck just looking at lawyers in Fresno.

    The way it went down in the Madoff case is that a handful of investors put Madoff into an involuntary bankruptcy (same thing can happen here -- it just takes 3 people). There is a bankruptcy trustee in charge of the Madoff case with a site at http://madofftrustee.com/. There are hundreds of lawyers working on the Madoff case, and you can get names and numbers of those lawyers just by reading some of the filings in that case and looking at which lawyers filed them (click http://madofftrustee.com/DocketFilings.aspx to see the list of over 200 filings). You can be pretty sure that at least some of the hundreds of lawyers in that case have offices in California, and California office or not, many would be happy to talk. You could also contact some of the Madoff victims (list found at http://www.finalternatives.com/files/complete_madoff_victim_list.pdf) and ask who they are using for legal counsel.

    It is just like a medical problem. If you think you have a heart problem, you can't sit at home and wish it would go away. But a good doctor might well see you and tell you "don't risk the open heart surgery yet, lets try diet and exercise". In fact, it is was life threatening, I'd get a second opinion from a heart specialist even if I later opted to have my GP monitor it. Lawyers who full time work on this kind of financial "life or death" cases are usually happy to give that second opinion.

    And no criticism to leasingnews.org is intended here, it is so far an excellent source of information. The point that many investors get hurt by sitting back and doing nothing is exactly right. I would just add the caveat above, that rushing to pay somebody money without understanding how that investment will give a return is also something that gets investors hurt.

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  175. First, only one blogger here refers to her relative getting advice from a CPA to invest, where his motivation was a commission from HL Leasing, and was evidently later found out doing so for other clients and lost his license, may also have had legal action.

    All the investors I spoke with, perhaps 40 from all over the United States were long time investors who
    were attracted by other investor friends, and for perhaps 15-20 years
    better than average interest rates than the stock market or CD were delivered on time. It was like being
    a member of the "inside."

    I was not recommending making a committment to one group or another,
    or an attorney, but seeking legal advice that pertained to your particular situation. It might also
    involve a CPA ( I am assuming people with money have a good CPA who does their tax work.) I am assuming people
    with money have a will, a trust, and
    have been in situations where they
    need legal advice.

    I am basically saying there are lawyers for people with money and
    without money to seek assistance.
    If you can't find it in the telephone
    book or interest, call the local attorney bar association in your city or county and ask them who is available for a free consultation or
    who they recommend who has "Ponzi"
    experience.


    The analogy of a doctor is perfect. You don't go to a heart surgeon to
    find out if you have an alergy. You
    first go to a general doctor, who if
    it is serious, will refer to you to a specialist or consult a specialist.

    There was a group that was trying to raise money to just hire detectives to find out if there really area assets and get real facts, but couldn't get enough interested...but
    that time period is over as it appears
    this is going to be a "free for all."

    Sitting back and doing nothing is the
    worse thing you can do as you are saying, "Whatever happens, will happen, and there is nothing I can
    do about it."

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  176. kitmenkin is right. My earlier 2-part post should not be read as suggesting people just sit back and pretend all is well. If you are doing to do nothing, at least make sure you are choosing to do nothing. Think about it, consider what it costs to take action, talk with somebody who knows this area of law, and then decide. If the informed decision is to do nothing, ok.

    There have been posts worrying about losing control if things go into bankruptcy or receivership. At least the "free for all" ends if there is a bankruptcy. The difficulty in getting money together to hire an investigator seems to be that everybody is hoping somebody else pays for it. At least with a bankruptcy or receiver, this "free rider" problem goes away. But so does a lot of the autonomy of the investors. Like everything else in a ponzi investigation, there are no good answers or solutions, only some answers that are less bad than others.

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  177. Thank you. "...only some answers that are less bad than others." Quite
    profound.

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  178. For the person who is Anomymous that wrote,I take exception to Kit's comment to see your family attorney or one from AARP, I apologize to you, it is obvious that you are of a more intelligence than I am. By the way my name is not Kit, and I did suggest AARP. If you notice at the end I sign "dj" on all of the post I made. I was only putting info out there that I felt was helpful, especialy to us less intelligent. There are a lot of us that don't have a clue what half of this info means, ie... receivership/bankruptcy. All we see is suggestions that cost money, money that most of us don't have anymore. Make no mistake, we are getting an education on all this and I hope to be as smart as you some day! Oh if you get the feeling I'm pissed your are probably right. dj

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  179. dj, it is clear that some people here do in fact know a lot about some aspects of leasing, or some aspects of how courts handle fraud, and have been willing to share some general information for free. It just means that they've hit this turf before, but it would be a mistake to assume that anybody here is providing advice that you can rely on. For example, none of this is legal advice, nobody here is your lawyer. I also assume that if there are people still alive who were involved in plotting a ponzi scheme with HL Leasing, those people are reading this blog and they are posting comments here intended to divert and distract investors from tracking them down.

    There are a lot of very good lawyers who know this stuff quite well and would be willing to talk for free to investors and at least give them an idea about the options. They don't do it as a charity thing, but as a way of getting future work, as described in prior comments.

    And seeing a family attorney or one at an AARP discount is not a bad idea. If they don't know this area of law, they should refuse to help. Remember, once an attorney gives a client legal advice, they can be sued if they get it wrong and the client is hurt as a result. So if you see a lawyer through the AARP program, you can either rely on their advice or rely on their malpractice insurance.

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  180. Dubai, Scotland, London, Russia, New York, Minneapolis

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  181. DAN WAS PRESIDENT OF H.L.LEASING. HE ASSURED US THAT OUR MONEY WAS SAFE.DID HE KNOW ANYTHING ABOUNT THE COMPANY OR DID HE JUST TAKE OUR MONEY.
    SIGNED TO LATE TO START OVER.

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  182. That is the point I'm trying to make. You read these post and you don't know who is who and what's good advice and what's bad. Everyone needs to make a decision as to what to do. The problem is that you have a varied age group. You have young to old involved in this and not everyone has a Harvard Degree. So the more info that is brought to the table the better for everyone. Some advice will work for some but not for others. And for someone to take EXCEPTION to an idea is just plane wrong, and I will not sit back and ignore it. There is alot of places out there that can help Seniors with this type of thing, they just need to know about it. Yes you are right, some of the legal counsel that can be done thru these organizations might not fit exactly, but at least it opens up a dialoge to proceed. And what about the people that aren't seniors, they are in this too and probably are just as confused as the rest of us. I don't know about anyone elses situation only mine. I know how I got into this mess, and how I made the decision invest. But I have a feeling that there are alot of people reading this that are still wondering what is the right thing to do. What I'm doing is reading this blog and making my own decision as to what to do next. dj

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  183. Otto was also in Africa within the last year.

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  184. Sounds like we we afforded John and his wife a very nice ability to travel the world. I hate him more and more!!

    Stay strong everyone.

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  185. Another thing to look at is Dun & Bradstreet (see http://www.manta.com/coms2/dnbdescription_hzfm9w_0194CRE_0194-CRE). They sold reports that included risk analysis for things like "business failure". Did any of you base your investment decision on a D&B report? If so, do you still have a copy? What did it say? If D&B said "excellent company, zero risk" and you invested based on that, you'll want to talk with a lawyer asap. I have no idea what the D&B reports said over the past years, so there might be nothing there, but it is worth looking at.

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  186. From what I have read on this blog, there are two groups of lenders working with competent attorneys. There could be other groups as well. The reason there are groups is there is strength in numbers and the costs can be split. One disadvantage is that each slice of the pie (any money that can be recovered) gets smaller. Anyone who has had to deal with the legal system knows that ongoing legal fees can be prohibitively expensive even for those that have any money left. If there is litigation the costs go up more. If other lenders want to join these groups, you would most likely be welcomed if you are willing to pay your share of the costs including costs incurred before you joined.
    What I am trying to learn and it seems other are as well, is if there is an advantage to joining one of these groups or by just having my own attorney. Will I get any more money back by being in one of these groups if there is money or property that is recovered. And then because it has been reported that there will be a Recievership, how will that affect any chance to get something back. It has also been reported in earlier posts that any Court action such as a Recievership or Bankruptcy will put a stay on other legal action, and that the Reciever or Court will go after money and property and distribute any to the creditors (all of us including those with lawyers and those without). If this is so does being part of one of these groups make sense? Also would the Reciever or court look toward HL officers like Dan for money or is this something the groups do.
    I am going to try get some general information on options from an attorney who specializes in this type of law and post the general comments. If either of the attorneys,Tom McCurrin or Don Fishbach, cares to present some answers, I'm sure it would be welcomed and may bring them some new clients

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  187. You're right, you should talk with an attorney about this to know for sure. However, the basic rule is that if a bankruptcy is filed everything else stops. If you have a lawsuit already going against the bankrupt company, you can ask for permission to keep it going (so relief from the bankruptcy stay), but it doesn't seem likely to be something you would get.

    With the caveat that this is not legal advice, since you need to find a lawyer to give firm answers, here are some thoughts:
    1. There are more than two lawyers. You should ask of any lawyer you are considering how many massive fraud cases they have done and how many receiverships and bankruptcies they've done, especially adversary actions in bankruptcies. You should also ask about their expertise in tracking assets through complicated financial webs.
    2. In addition to Fischbach and McCurrin (who, if they post those answers, might also want to post a list of similar cases they've worked on in order to reassure potential clients that they have the experience), I know of other firms, and not limited to Fresno, who have provided advice to specific investors. Some firms have looked at this and elected against not representing multiple clients due to the potential conflict of interest issues in representing multiple victims of the same alleged ponzi.
    3. There may not be strength in numbers. The Madoff trustee just went after a bunch of investors for colluding with Madoff. If the "numbers" contain some people who colluded in a fraud and some who didn't, the attorney would then have a conflict that cannot be resolved. The attorney can't sue one client on behalf of another client.
    4. The trustee or receiver will not normally charge you fees.
    5. If there is litigation (other than bankruptcy or receivership), presumably that is because there are assets to be found, and that means that a contingency fee payment arrangement becomes a possibility, so it may not be the case that if there is litigation the up-front costs go up more (contingency fees can be a lot of money too, but are back-loaded)
    6. Payment of a portion of costs incurred is one thing, but I think there is a serious question of whether ethics rules let an attorney do work for client #1 before representing client #2, and then charge client #2 for that work done for client #1 months later when client #2 joins in.
    7. There isn't likely going to be a "gotcha" in the eventual distribution favoring those who pay for lawyers early on. Litigation happens in public. Joining litigation early doesn't usually give you priority on any bankruptcy claims, and people who litigated early don't get any kind of extra bonus in bankruptcy. The idea of bankruptcy is that all creditors are on a level playing field, and the trustee recovers assets in order to make as big a pile of cash as possible to pay off credtiros (including like in the madoff case suing some creditors if they got money they shouldn't have).
    8. Payments to insiders like Dan would be one of the first things the trustee looks to recover. Even "legitimate" payments to insiders would likely be targeted for recovery. Bankruptcy trustees don't trust insiders and it shows.
    9. Bad news is that you can't put John Otto into bankruptcy since he is dead. A bankruptcy lawyer could tell you whether you could put his estate into bankruptcy, I don't know.
    10. If you consult an attorney in an attorney-client context and post the comments, you are going to lose the attorney-client privilege. Get that attorney to give you the "ok" before doing so.

    Just google "ponzi receiver" and then google "ponzi bankruptcy trustee" and you will find a lot of answers to your questions.

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  188. This appeared in the May 15th edition, quoting attorney Tom McCurin.
    He is not interested in representing a client or group in this case at this time, so his comments may have more meaning. His experience speaks for itself:

    Leasing News asked veteran attorney Tom McCurnin, Los Angeles, who won the prosecuting cases involving the CMC Leasing Ponzi scheme (remember them?). He also had the unique experience of representing American Express in the past, who John Otto said he had purchased leases from and was offering them as collateral for the investments for the last ten years.

    “I have handled about a half dozen investment scams and ponzi schemes over the past three decades for both the government and the victims. While there is certainly an urge for immediate aggressive action, there are simply too many investors with divergent interests to formulate a single correct strategy.

    “Receivership? This is a possible outcome, either by the Department of Corporations or the SEC. The problem with this strategy is that the Receiver works for all the investors, not just a few. So victims that pay a retainer to an attorney could find out they are funding 500 other investor’s claims. Moreover, the Receiver has the ability to set aside fraudulent conveyances, and those include payments to the investors. Yes, you heard me right, there is a whole body of law which allows the Receiver to pursue payments made to the investors as fraudulent conveyances. The lawyers could email me for a short article I wrote on Receivers, fraudulent conveyances, and the dichotomy of “winning investors” and “losing investors.”

    “Involuntary Bankruptcy? This is certainly the cheapest alternative, but again, the Trustee works for all the investors, and has the same authority to prosecute fraudulent conveyances, including against the very investors that form the backbone of the unsecured creditors. It is a bit of a Robin Hood strategy (“rob from the rich and give the poor”).

    “Civil Actions? I represented American Express from about 1998 to 2004, and will tell you that there were no new lease generations from about 2003 forward. All their lease assets, including physical locations, pools, and employees were transferred to Key Credit. I doubt there is a stream of payments against which the investors can tap. This sounds like a ponzi scheme to me. Moreover, if any lawyer hits it big, what would prevent a jealous investor from filing an involuntary bankruptcy and getting all that money back as a preference or fraudulent conveyance? If you think the principals of HL Leasing are both culpable and collectable to pay a multi-million dollar judgment, you may miss your mark.

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  189. I just got an article sent to me by another investor/family...I would like to pass it on to you: This is an article written by an investor who lost in the Madoff ponzie.

    http://www.huffingtonpost.com/geneen-roth/what-i-gained-by-losing-i_b_156088.html

    I thought this article was so well written. It helps to put some of my thoughts in perpective. Now I wish the pain of loosing most of my money goes away.

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  190. I am so sorry for those of you who trusted Dan Ramirez and listened to other investors and put all their money into the hands of the scoundrels at Heritage. I would be very surprised if any of us get anything back. For myself, I am grateful that I didn,t put all my eggs in the Otto basket, and my lifestyle won't change.
    The chance of any recovery seems very small indeed. I don't want to pay for what the government receiver or the bankruptcy receiver will do for nothing.
    For now, I sit on the sidelines awaiting developments.

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  191. Try this formula:

    Assume there are $100 million of claims that are going to be made (higher numbers have been thrown around, but some of those are probably "losses" by insiders, plus $100 million makes for easier math). Now assume you have $100,000 of claims. Now assume that it ends up with a bankruptcy or receivership, or otherwise the claims are paid out evenly (or assume that even if you file suit on your own, any assets you find are going to be subject to claims by others once the public lawsuit filings indicate you've found assets). All are big assumptions and not necessarily accurate. But if true:

    With $100 million in total claims, and $100,000 in claims you have, you get $1 for every $1,000 that is recovered. So if you think an investigator or some specific lawsuit could recover an extra $1 million that would otherwise not be found, your expected value is $1,000 (i.e. your 0.1% share of $1 million is $1,000).

    This kind of formula is very easy to do on paper, but very difficult to do in the real world, and you never know if you are even close to correct on the values you apply. But it does underscore that the economics of hiring an investigator are very different for somebody with $10 million invested, and a 5% to 10% stake in the recovery than they are for somebody with $10,000 invested, who expects to get back only a tiny fraction of 1% of any recovery.

    Within the next day or so I expect to publish (for free, and I'll put a link here) a significant amount of information that I've found as a result of my investigation, including an indication that there are indeed some leases that HL apparently still holds an interest in (don't get too excited though the leases I located, if they still exist, are worth well under $3 million). I'm working out the details for how to get the information posted in a way that best assists the various people trying to figure out what happened.

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