God Bless America

How a Newport Beach power couple used right-wing politics to build an empire worth absolutely nothing

Jo Ellen—who failed to respond to more than a half-dozen requests for an interview—has apparently been suspicious of Herdman. The Republican-run Orange County district attorney's office has refused to investigate Eddie's businesses despite numerous complaints from bilked victims. However, they had no problem cooperating with Jo Ellen's freelance investigation into Herdman. On Aug. 14, 1997, the DA's office faxed to Jo Ellen a detailed law-enforcement report on Herdman. Chief Assistant DA Maurice Evans and Deputy DA Burl Estes wrote, "Pursuant to your request this morning, I had Irene in teletype run a warrant check on Ms. Herdman. The check was negative. Ms. Herdman has no warrants. As a backup check, I checked our office system with similar negative results. The teletype printout is attached."

Corporation and court records show that Eddie has established a succession of financial firms. The paper trail is so complicated and contradictory that Eddie himself was at pains to explain in court who owned the companies and how much money flowed through the accounts. Each time, he drafted investors with promises of huge returns and then declared bankruptcy or left the company entangled in a web of lawsuits. In the 1970s, he launched the National Association for Employee Benefits. He left the firm swamped in legal claims. He created American Life Underwriters in 1992 and filed for bankruptcy in 1997 following multiple lawsuits alleging fraud. At the same time he was attempting to steer American Life into bankruptcy, Eddie quietly launched Mega Agency Insurance Services and Mega Agency Group—the company to which the Picketts entrusted more than half a million dollars. Eddie told investors Mega would soon be worth $75 million; in 1999, it followed American Life into bankruptcy. In June 2001, yet another new investment firm, Metropolitan Financial Group, opened in Eddie's office space with his old phone numbers, even as Judge Alberts tried to sort out the American Life and Mega bankruptcies.

Creditors have worked unsuccessfully to get at the one asset they know Eddie does have: the Allens' Corona del Mar home. But before the 1997 bankruptcy declaration, Eddie gave Jo Ellen exclusive ownership of their home, frustrating his creditors again. Jo Ellen turned around and mortgaged the home three times, so encumbering it with loans that it is valueless to creditors. One of those who aided Jo Ellen and Eddie in those moves was none other than Dale Dykema, a key member of the elite Republican Lincoln Club.

By the time the Allens entered the Santa Ana courtroom, Eddie, who once advertised that he managed "assets in the billions" and was personally worth $150 million, claimed virtually no assets—some furniture, clothes, a leased car and a 10-year-old dog. He figured his monthly expenses at $11,866, including $1,000 for dinners at the Balboa Bay Club.

In the course of the bankruptcy trial just ended, American Life creditor Jon Illingworth of Tustin says Jo Ellen approached him with a question.

"She asked me, 'Why are you so mean to my husband?'" Illingworth says, "I told her, 'Because your husband's a crook and steals other people's money.'

"She's got a lot of explaining to do."

Next week: Eddie Allen, master spy.

Jo Ellen Allen on KOCE's Real Orange
Photo by Jack Gould

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