By Charles Lam
By R. Scott Moxley
By Gustavo Arellano
By R. Scott Moxley
By Gustavo Arellano
By R. Scott Moxley
By HG Reza
Photo by Yoshitaka OkadaDespite citizen complaints and a federal bankruptcy judge's ruling last year that Edgar Dale "Eddie" Allen stole millions of dollars in a scam that relied on fake business, war and espionage credentials, the Orange County district attorney's office has refused to investigate the Newport Beach businessman.
We may now be able to explain the DA's five-year paralysis when it comes to Allen: political favoritism.
A court document obtained by OC Weekly shows that while the Republican-controlled DA's office blocked an Allen investigation in the summer of 1997, it was granting Allen's wife—local Republican Party vice chairwoman Jo Ellen Allen—special and possibly illegal access to secret law-enforcement databases.
In August 1997, Jo Ellen—who is also a public-relations executive at Southern California Edison (SCE)—asked the DA's office for a criminal background check on Lucinda Herdman, her husband's longtime business associate and frequent travel companion. Deputy DA Burl Estes and then-Chief Assistant DA Maurice Evans checked the Wanted Persons System, the California Law Enforcement Telecommunications System, National Crime Information Center and the DA's own internal records. Results of their review—which found no record of criminal activity—were then sent to Jo Ellen's fax machine at her SCE office.
Neither of the Allens will grant interviews to the Weekly, but in a letter to the paper last year, Jo Ellen claimed she obtained the background check as a favor to 46-year-old Herdman—"on behalf of Lucinda, at her request."
In 1997, Herdman—who had abandoned her husband in Florida and moved to Orange County to work with Eddie selling insurance—was seeking custody of the couple's young son. She used the DA's unusual memo to convince a judge there that her role in Allen's controversial businesses was not then under criminal investigation.
Evans left the DA's office in 1999. Now an attorney with Pohlson, Moorhead & Goethals, he did not respond to repeated requests for an interview, even after the Weekly notified his secretary of the subject.
Estes, however, said he remembered the incident, acknowledged it would be "very rare" for a citizen to get such access, but said he does not consider it a suspicious or illegal search.
But another DA, who spoke on condition of anonymity for fear of retaliation, said he was amused that a veteran prosecutor would claim not to know the public isn't supposed to have access to secret law-enforcement files.
"Everyone knows the public has no access to these databases," the DA said. "The information is heavily regulated by the state in terms of who can access it and for what purposes. Anybody just can't call up and ask if someone else has warrants out for them. Otherwise, we'd have these calls all the time."
State law also seems to contradict Estes, an outspoken Republican who often sends feisty liberal-bashing letters to local newspapers. California Penal Code unambiguously states, "Any employee of the local criminal-justice agency who knowingly furnishes a record or information obtained from a record to a person who is not authorized by law to receive the record or information is guilty of a misdemeanor."
The next section of the criminal code also makes it a misdemeanor for a citizen, such as Jo Ellen Allen, to order and obtain criminal background checks from secret law-enforcement databases.
Estes and Evans' role in aiding Allen is ironic. A member of the DA's Special Assignment Unit, Estes' job is to investigate and prosecute political corruption. Critics suggest granting Allen a behind-the-scenes favor reveals the DA's bias.
"For years, we have wondered why the Orange County DA has refused to prosecute Eddie Allen for boldly stealing millions of dollars from innocent people," said Tustin's Jon Illingworth, whom Allen owes more than $100,000. "Eddie bragged that he would never be prosecuted because of his connections. I guess it's hard for the DA's office to investigate its political friends."
If the Allens have friends, it's unlikely they are past business associates—some of whom lost their entire life savings. To help lure investors to his scams, Eddie Allen confidently portrayed himself as, among other things, a politically connected Harvard lawyer, a financial genius who managed "billions" in assets, a former New York Yankee, an Air Force One pilot for John F. Kennedy, and a key CIA spy who was captured and tortured by Vietnamese Communists during a mission so secret even the CIA didn't know about it. Federal bankruptcy judge Robert W. Alberts, a Republican, shattered that impressive façade in September 2001 when he ruled that Allen had fabricated his life story in schemes to defraud millions of dollars from unsuspecting investors. When Allen continued to insist that he did not fabricate his spy stories, unamused CIA officials did something they rarely do: they flew from Langley, Virginia, to Santa Ana and testified that Allen was a con man. A parade of legitimate, decorated spies and military officers also strenuously disputed the businessman's tales.
The revelations must have stung, but the unrepentant Allens have continued to enjoy a comfortable lifestyle in Newport Beach. Through a series of legal moves—such as placing his luxury car and a Corona del Mar estate in Jo Ellen's name—Allen has claimed poverty and managed to avoid paying more than $3 million he owes defrauded investors.
The scam wouldn't have been so successful if Orange County justice officials had paid attention. Before Allen convinced others to invest in his then seemingly legitimate businesses, Illingworth filed a detailed, two-page complaint with the DA on May 28, 1997. He wrote, "I am asking you to stop this man before he destroys any more innocent people by defrauding them of their rightful monies."
The DA—who has prosecuted scam artists who've cheated fewer people for less money than Allen—was not moved. In July 1997, prosecutors sent Illingworth a brief letter claiming they did not have the investigative powers to review Allen's conduct. They killed the complaint. Federal court records show that more than a dozen more individuals would become victims in Allen's schemes.
Jo Ellen—who, as a Republican commentator on KOCE's Real Orange, routinely questions the ethics of her ideological opponents—has confidently cited the DA's inaction as evidence that her husband is innocent.
That spin frustrates Allen's ex-investors and -employees. Gerald Nowotny, one of Eddie's former associates, told law enforcement that Eddie had an accomplice: his wife.
"I would like to bring a serious crime to your attention involving fraudulent conversion of over $3 million of investors' funds in several different state jurisdictions," Nowotny told the DA in July 1997. "Eddie Allen has heavily relied upon the credibility and assistance of his wife—Jo Ellen Allen of the Orange County Republican Party and a [Governor Pete Wilson-appointed] member of the California Bar Association board of governors—to create the aura of credibility necessary to gain the trust and confidence of investors. We have significant documentation that demonstrates that Eddie has operated a Ponzi scheme."
Prosecutors responded with a perfunctory letter refusing to follow up on Nowotny's offer to document the scam.
The DA's inaction may have emboldened the Allens. According to court testimony, Eddie once told angry investors he was immune from prosecution.
"The law can't touch me, and if it will make you feel any better, go ahead and sue me," he reportedly said. "Then you will really see how influential and powerful I really am."