Gassia Apkarian defends wife of man accused of Ponzi Scheme
SANTA ANA - The couple wore all black; the wife drying her tears with a tissue as the jury’s verdicts - more than 500 so far - were handed down over two hours Monday afternoon.
At the end of the day, a Superior Court jury had convicted Jeffrey Gordon Butler of 448 felony counts of fraud and related charges, acquitted him of four charges, and deadlocked on an additional 63 charges. Verdicts on the remaining 359 charges are expected to be read beginning Tuesday morning.
Butler, 51, of San Juan Capistrano, has been in the Central Men’s Jail since his February 2006 arrest on charges that include financial elder abuse and the sale of unqualified securities. Prosecutors say Butler bilked 125 people of more than $11 million. He faced a maximum of 321 years in prison if convicted of all 874 felony charges.
Butler and his wife, Peggy Warmath Butler, are accused of operating a classic “Ponzi scheme,” in which they are alleged to have persuaded elderly people to invest in an overseas telecommunications business and promised an interest return each month, but instead pocketed the cash or used it to pay off earlier investors.
Peggy Butler, 49, is charged with filing false tax returns with her husband. She is free on $150,000 bail. She faces up to 11 years and four months, said Farrah Emami of the Orange County District Attorney's Office.
Several investors attended Monday’s hearing, including some who support Butler. Heidi Lemieux owns a commercial print shop in Orange with her husband Doug. They invested with Butler, but refused to say how much they lost.
Lemieux said Butler spent time with her and her husband. When they ate together, Butler insisted they split the check.
“I’ve known this man long enough and seen the goodness in his heart,” Heidi Lemieux said prior to the convictions. “I know this person and I love him. He’s just a business man working hard, supporting his wife and family.”
Prosecutors said Butler started Senior Information Services in the mid-1990s, offering senior citizens help with estate planning. Over the next few years, he opened a network of other businesses and solicited investments from clients, promising high but believable returns of 12 percent annually, prosecutors said.
Eventually, the funds were shifted offshore to Global Network Providers of Grenada, prosecutors said. The investors had no knowledge of the shift, Senior Deputy District Attorney William Overtoom said.
The clients' money went to the development of a “telecommunications” company on the eastern Caribbean island, which is not subject to U.S. law, Overtoom said. The company had no assets or income, Overtoom told jurors.
Jeffrey Butler is accused of convincing investors that GNPG paid 12 percent interest per year on promissory notes, when in fact the notes did not require payment for up to three years and did not specify a time or method of payment, Emami said.
Investors were not made aware that these investments were not authorized to be sold in California. Some victims agreed to invest after being told GNPG was an IRA-qualified investment, which it was not, Emami said.
She said Butler allegedly ran out of funds to maintain his scheme and sent his clients a letter claiming that Hurricane Ivan had caused a delay in payments.
Jeffrey Butler's attorney, Ken Chinn, argued Butler may have been starry-eyed about an investment in a Grenada telecommunications venture that never panned out, but he was a careful businessman with only the best intentions for his investors.
Peggy Butler is accused of working with her husband by maintaining the financial records for each of the Butlers’ companies and accounting for the deposits and expenditures of investor funds.
The couple is also accused of filing false tax returns between 2001 and 2004 and failing to report income of more than $5.5 million, resulting in an unpaid tax liability of more than $530,000, Emami said.
Peggy Butler’s attorney Gassia Apkarian portrayed her client as a wife with limited financial knowledge who was told to write the checks. She is an “innocent spouse” and “victim of the circumstances.”
Jo Peacock of Orange lost $20,000 to the alleged fraud.
“I don't like to use the word revenge, but what he did was terrible,” she said in a November interview. “This hurt me â¦ My husband and I worked hard all our lives for every dime we ever had, so for someone to just take it from you, that's what hurts.”