Supporters of Capistrano Man Accused in Fraud Gather in Courtroom as More than 400 Guilty Verdicts Read
By Jonathan Volzke, The Capistrano Dispatch
A jury issued 639 guilty verdicts against a San Juan Capistrano man accused in an $11 million investment fraud, even as more than a dozen of his supporters continued to contend he is innocent. The man's wife was also convicted of filing false tax returns in connection with the case.
The jury in Orange County Superior Court Judge James A. Stotler’s courtroom on Monday issued verdicts in 550 counts against Jeffery Butler, 51. On Tuesday, the remainder of the verdicts were handed down, including four guilty verdicts against his wife, Peggy Warmath Butler, 49.
Jeffrey Butler was charged with 874 criminal counts for taking the life savings of numerous seniors in a “Ponzi” scheme, as well as filing false tax returns on his profits, by fraudulently raising more than $11 million in investments from unsuspecting victims through the illegal sale of unqualified promissory notes or stocks. Peggy Butler is charged with filing false tax returns with her husband.
Jeffrey Butler now faces a maximum sentence of more than 300 years in state prison. Peggy Butler faces a maximum sentence of 10 years in state prison. Sentencing for Jeffrey and Peggy Butler is scheduled for Sept. 18, in Department C-41, Central Justice Center, Santa Ana.
A jury of 12 people and eight alternates was selected from a pool of 2,200 prospective jurors. The jury trial, which began Nov. 7, 2008, lasted almost eight months and included testimony from 92 victims, including 82 elderly victims, and video testimony from 49 victims, which was recorded prior to trial to ensure that the victim's testimony was preserved in the event that they were unavailable to testify at trial due to death or illness. At least six victims died during the course of the trial and 52 victims died prior to the case being brought before the jury.
Peggy Butler remained free on bail, while Jeff Butler remains behind bars. The couple’s children were in court Monday, surrounded by more than a dozen friends, supporters and investors with the Butlers. Doug and Heidi Lemieux of Orange were among them: they’d invested with the Butlers for years, after meeting them through Doug’s parents, who are also investors.
Business owners themselves, they remained convinced of the Butlers’ innocence. “I know the investments are legitimate, I’ve checked them myself,” Doug Lemieux said. “Jeff Butler is a very caring individual who always had the best interests of his investors in mind.”
Lemieux said he visited Butler in jail since his arrest, and Butler’s first concern remained his investors and making them whole.
Lemieux and others said the government, in the shadow the Enron scandal and other similar high-profile crimes, overreacted to the Butler case and filed an overwhelming number of charges to make it impossible for the Butlers to fight – and make it seem to the jury that
According to the District Attorney’s Office, in the early to mid 1990s, Jeffrey Butler operated a company called Senior Information Services (SIS) offering to create living trusts, wills, and other estate planning structures for senior citizens for a fee. The business generated many of the victims who began to trust Jeffrey Butler. Between 1995 and 2004, in a series of businesses which changed forms and names, Jeffrey Butler is accused of failing to provide investors with any documents describing the new company, how it made money, or the risks of investing in the company as required by law to protect consumers and investors. He is accused of transferring investments between companies on several occasions without informing his elderly investors or providing them with only limited information. The defendant is accused of immediately taking 10 percent of the investors’ money for himself without their knowledge or consent.
In 2000, Jeffrey Butler is accused of shifting his clients’ funds to his newest venture, Global Network Providers (Grenada), Inc. (GNPG), without the knowledge of the investors. The clients’’ money went to the development of a “telecommunications” company supposedly on the eastern Caribbean island of Grenada. The company had no assets or income.
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. Investors were not made aware that these investments were not authorized to be sold in California. Some of the victims agreed to invest after being misled into believing that GNPG was an Individual Retirement Account (IRA) qualified investment, when in reality the investments were not IRA qualified. Butler is accused of simply having “IRA” typed at the top of the promissory notes. Butler is accused of failing to inform many of the investors that the telecommunications company was based in Grenada. Being that GNPG was on the island of Grenada in the Caribbean, the company was not subject to U.S. laws. Butler is accused of running out of funds to maintain his scheme and sending his victims a letter in which he lied to investors, claiming that Hurricane Ivan had caused a delay in payments.
Peggy Butler is accused of working with her husband by maintaining the financial records for each of the Butler’s companies and accounting for the deposits and expenditures of investor funds. Between 2001 and 2004, the Butlers are accused of filing false tax returns and failing to report income of more than $5.5 million, resulting in an unpaid tax liability of more than $530,000.
But the Lemieuxs said they never saw any examples of the Butlers living a lavish lifestyle. The couple lived in Hidden Mountain Estates in San Juan Capistrano, and their children attended Capistrano Valley Christian Schools – among the more modest of the city’s private-school offerings. “If he did what they say he did, show me the money,” Doug Lemieux said. “Where’s it all at?”
Doug and Claudia Niccola, owners of the Tea House on Los Rios in San Juan Capistrano, were also in court to support the Butlers. They said it was chilling the government had filed so many criminal charges against the couple. “That’s the scariest thing about what’s happened here,” Alan Niccola said. “He really did care about those people. There was no scam at all.”
Peggy Butler left the courtroom for the lunch break Monday surrounded by friends and her children, Claudia Niccola clutching her hand down the hallway.
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My granny lost all her money with Mr. Butler. Her lifestyle had to change drastically because of this man. My grandfather had worked hard all his life to provide for her upon his death and to let someone just take it all. Granny had heart problems and this led to her passing even sooner. I can't believe none of the money will be paid back to any of his victims as they say it is no where to be found. Jeff & wife should spend the rest of their lives behind bars. He thought he was going to get away with this as he targeted mostly elderly people and they are so trusting. I want to know where the attorney is that signed the living trust? I did try to call the attorney and the number was disconnected. I even spoke to Mr. Butler to find out where the money was and was told he had lost all his money to and I could get an attorney, but it would cost alot and I would probably never see any of my granny's money. After telling Granny this her health just deteriorated rapidly.