With Friends Like These

GOP official and Edison spokesperson Jo Ellen Allen drew friends, patriots and Republican allies into her husbands multimillion-dollar investment scam

Dalton and his wife, Nancy, agreed to give Eddie the money. However, as soon as the loan was due in 1995, Dalton says Eddie "just made excuses for not paying me back," and Jo Ellen—whom Southern California Edison pays more than $150,000 per year for public-relations work—"began ignoring me."

"I have to admit that I was surprised when Jo Ellen stopped taking my telephone calls. I thought we were friends. We had gone to lunch together several times," Dalton told the Weekly. "Looking back, I was stupid for being trusting. But I took what they told me at face value."

For seven years, the Allens—who drive luxury cars, regularly dine at the exclusive Balboa Bay Club in Newport Beach, enjoy celebrity status on the local Republican Party circuit, live in a sprawling Corona del Mar ocean-view house, and still lecture other people on morality—have kept Dalton's money and paid not one penny in interest. Much as they did nine years ago, the Allens angrily insist they have done nothing wrong. Forget the court case and the words of a Republican judge; they are the victims of a fuzzily defined liberal conspiracy, the Allens say.

"My husband's business issues have provided the perfect opportunity for the Weekly to engage in a search-and-destroy mission . . . using weapons of falsehoods, half-truths, innuendo and distortion," said Jo Ellen, longtime vice chairman of the Orange County Republican Central Committee, in a prepared statement. "Like other victims of their yellow journalism, I find myself having to publicly defend and explain against lies and allegations based only on their twisted and perverse motives."

Said Dalton, "I guess I shouldn't expect to see my money ever again, should I?"

 

Just 23 days after Judge Alberts' decision outlining her husband's frauds, Jo Ellen did something at which she is undeniably good: she gave a speech to a friendly audience at Newport Beach's elite, members-only Pacific Club, which touts itself as the place that "reflects the distinctive lifestyle of Orange County's business and professional leaders." Jo Ellen's talk was titled "The Challenges of Being a Christian in the Midst of Controversy." Though she has steadfastly declined to answer questions about the speech, it's doubtful she mentioned the challenges facing the victims—all self-described Christians, too, by the way—of Eddie's scams.

"It's a wonder lightning doesn't strike Eddie and Jo Ellen," said Irvine High School teacher Sheryl Phelps, who was introduced to the Allens in the early 1990s through Harry Meader, one of her work colleagues. On three occasions, she and her husband, Dr. Harrison Phelps Jr., listened to Eddie's well-oiled sales pitches—complete with false tales of a Harvard law degree, military heroism, financial genius, stellar net worth, his wife's political credentials and his personal ("top echelon," he'd say) friendship with former President Ronald Reagan. Convinced Eddie's representations were truthful, the Phelps eventually allowed him to control their entire life savings, valued then at $60,000. Eddie, they would later tell the FBI, made them feel they were lucky to be in the same room with him.

"I can't tell you how hard we worked to save that money, but it took so many years," said Sheryl Phelps, who teaches English and serves as student-activities director at Irvine High School. "Before we gave him our money, there had been a big downturn in the market, and Eddie told us that no one who relied on him ever lost money. He said our money would be safe. He acted like such a big shot."

As in numerous other examples documented in federal court records, Eddie took the Phelps' money and reneged on the deal. The Phelpses didn't start to realize they were in trouble until Eddie started to give them "the runaround." According to the Phelps, he stopped taking their calls and, without their written authorization, reinvested their life savings in one of his own companies that was headed for bankruptcy.

"When I expressed anger and astonishment at the legality of such a move, [Eddie] said he was an attorney in California and it was indeed legal," said Harrison Phelps. "He also expressed hurt at my 'lack of trust' and said he 'thought we were better friends than that.'"

The Phelps never saw their money again.

"It's very frustrating that somebody would lie right to your face," said Sheryl Phelps. "I can't tell you how difficult it has been. I try very hard not to think about what happened because it makes me so angry. I come from a long line of loyal Republicans, but I can tell you that because of this experience, I switched my party affiliation. I can't believe the Republican Party here continues to let the Allens use them. It's astonishing."

 

Some of the victims of Eddie's schemes declined to speak on the record to the Weekly because, they say, they fear the Allens will use their political connections to retaliate. One of those victims is Gary Robin, another diehard Republican who had been Eddie's best friend since they attended high school in San Francisco together in the early 1950s.

But Robin's story is clear enough in federal court records. They show that Robin and his wife, Sally, loaned Eddie $610,000 after Eddie said "he did not know anyone on earth I want to work with more than you." The Robins also got their friends to help Eddie in his plan to launch an insurance business. But when the money wasn't paid back, Gary Robin made his feelings known in a June 27, 1997, letter to Eddie.

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