With Friends Like These
Photo of Jo Ellen by Jack GouldThis article is part of a series by R. Scott Moxley which includes"Patriot Games" in the Oct. 26 - Nov. 1 issue and"God Bless America" in the Oct. 5 - 11 issue.Dr. Ted Dalton chuckled when he said his memory is fading, but the retired former president of Newport University won't ever forget meeting right-wing, anti-feminist orator Jo Ellen Allen in 1992. Allen and her husband, Edgar Dale "Eddie" Allen, had just quietly stiffed their Corona del Mar landlord $14,000 in rent and—in hopes of winning Jo Ellen a seat in the state Assembly—moved to the Santa Ana rental home of the late Stephen Wagner, a married but closeted-homosexual Republican who would soon be convicted of embezzling $4 million from Newport Beach schools. Of course, Dalton wasn't privy then to such behind-the-scenes dirt. For all everyone knew, Jo Ellen and Eddie were who they said they were: the ideal Orange County Republican, Christian couple whose wealth and morals were surpassed only by their personal heroics.
"Jo Ellen was somebody I respected very much," the mild-mannered Dalton recently remembered. "She was a bright lady who was very active in Republican politics, was president of a conservative women's group [Eagle Forum of California], and professed a deep faith in Christianity. She impressed me greatly. So I volunteered to help her in her  Assembly campaign."
Dalton's story is typical of the many people who considered themselves the Allens' friends—acquaintances and political allies who, ignoring rumors that Eddie was running a giant scam, invested their life's savings with him and lost everything.
Sometimes the rumors became public. During Jo Ellen's Assembly race, opponent Tom Umberg—a conservative Democrat and onetime federal prosecutor—labeled the pious-sounding Allens hypocrites for what he said was a history of questionable business and financial practices. As unaccustomed to shopping at thrift stores as she was to having her morality questioned, Jo Ellen reacted with trademark biblical indignation. She assured supporters as well as reporters at both local daily newspapers that she and Eddie were innocent victims of a deceitful, politically motivated smear campaign. According to Jo Ellen, Umberg's strategy was to "lie, lie and lie more."
The Allens' public-relations effort didn't end there. Jo Ellen also enlisted help from then-Republican Assemblyman Curt Pringle, whom Eddie routinely used as a "confidential" personal reference to entice elderly Republicans into loaning him large sums of money. Pringle told the Weekly he was unaware that his name had been used for Eddie's business, but during the Allen-Umberg race, the Anaheim assemblyman publicly vouched for the Allens, calling Umberg's allegations "disgusting" and "despicable." Tom Fuentes, chairman of the powerful Orange County Republican Central Committee and Jo Ellen's close ally, described Umberg's allegations as "malicious" and "shameless." The Allens, he harrumphed, are "going to have some substantial grounds for lawsuits when this is all over."
Though no slander suits ever materialized, many Republican faithful were sold. The local mainstream media backed off further investigation of the Allens, and the Allens' reputation remained intact.
Gary Robin: "What in the world
is going on??"
"I remember that Jo Ellen and Eddie denied the allegations with such conviction," said Dalton. "She said the charges were nothing more than personal attacks from political opponents and that they had no foundation whatsoever. We believed her."
The heated election ended with Umberg trouncing Jo Ellen, who had demonized sex education, child care and college women's studies classes—which she argued were a celebration of lesbianism. But it would take another half-decade before the allegations rose again in any public way. In September of this year, federal Judge Robert W. Alberts ruled that Eddie—operating a mystifying maze of businesses with incomprehensible accounting methods—had shamelessly used politics, patriotism and religion to "defraud" numerous, unsuspecting elderly Republicans of millions of dollars. Much of the investors' money remains missing to this day; in a stinging 86-page ruling, Alberts said Eddie "knowingly and fraudulently" lied under oath about what happened to the money.
Sadly, Dalton, a self-described diehard conservative Republican who worked on Jo Ellen's '92 campaign and considered himself their friend, is just one of the victims. He remembers he remained a "big fan" after the defeat and was happy to receive an unexpected visit from Eddie two years later. In November 1994, Eddie—who the judge says falsely represented himself as a Wall Street financial attorney, decorated Vietnam-era military hero, and prisoner of war who had spied for the CIA—wanted a short-term $15,000 loan to help launch a Florida business. He guaranteed Dalton would get his money back plus 15 percent interest, court records show.
"Eddie told me his stories about his military record, and he was smooth—in fact, very smooth. But the paramount reason I felt safe loaning the money was because of Jo Ellen. She was a very influential Orange County Republican. She is friends with important people like Jack Kemp," said Dalton, referring to the high-ranking Republican congressman, former Bush cabinet member and Republican vice presidential candidate in 1996. "So I had lunch with Jo Ellen at a restaurant on Campus Drive near John Wayne [Airport], and she told me, 'Oh, your money definitely will be safe. Eddie is as honest as they come.' I remember that conversation well. They had me believing."
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.
"A lot has happened since we were teammates 45 years ago and you were my 'best man' at my wedding. I purchased the first $100,000 life insurance policy you ever sold. . . . You came to me on this deal because you again needed help, and I have raised $1,150,000 for your new project," Gary wrote. "I have always been there for you. Please do what is right and honor our agreement."
The next month, the Robins were still pleading—in writing—for the return of their money.
"What in the world is going on? Your investors are calling me day and night because you refuse to return their calls, and no one including me knows what is happening," he wrote. "No one just hands over almost one and a quarter million dollars for the company to gamble with. We have a right to know where and how the money is being spent—to know for sure the money is not being used to pay old creditors . . . or Jo Ellen's political campaign. . . . These questions I am asked daily and cannot honestly answer to my wife or my friends. Please take care of these things so I, at least, will not be so embarrassed that I start avoiding the phone."
Three months later, the Robins were disillusioned.
"The possibility that we could lose our funds—funds that represent a lifetime of work—is horrifying. Whatever reason you have for stringing me along for the past seven months cannot be allowed to happen," Robin wrote on Oct. 27, 1997. "I am truly sorry you have pushed our friendship to its limits by not honoring your word."
The Robins hired an attorney and eventually became one of the few lucky ones: Eddie paid them back—using other investors' money. Nevertheless, the Robins are no longer friends with the Allens.
Lee Pickett, 81, of Port Ludlow, Washington, was not as fortunate as the Robins, her next-door neighbors. The Robins introduced Lee and her disabled husband, John, to Eddie and Jo Ellen. After selling himself as part of a dynamic, conservative, Republican power couple whose lives were dedicated to Christianity, Eddie enticed the Picketts into loaning him $553,000 in 1996. To do that, the Picketts liquidated another investment then earning them $7,000 per month.
"He sold himself as a good Republican, a military hero, a good family man," remembers Lee Pickett. "And he always acted very concerned about my husband. He had me believing that he wanted to be friends of ours and help us. He promised us we would make a killing off him. We didn't know it then, but it was all an illusion."
Like other examples outlined in federal court records, friendship was fleeting once Eddie got control of the Picketts' money. He wrote them terse notes, Lee says, rarely answered their phone calls and made "lots of excuses" for delays in paying when the money was due. The Picketts' financial situation became perilous.
"I have asked you to help us in the name of friendship, and the fact that we came through for you when you needed us, but your responses have been cavalier, cool, evasive and vague," Lee Pickett wrote Eddie in 1999, just before they had to file for bankruptcy to keep their home.
The Picketts never saw their money again. The next year, Lee was still pleading for their money.
"I am disappointed, disgusted and disturbed over our business experience and contact with you," wrote Pickett.
"It's been a tremendous struggle for us," Pickett told the Weekly. "What Eddie did to us is so despicable. We are the victims. He has to be stopped from doing this to anyone else."
She also says Eddie has a not-so-silent, if unofficial, business partner: his wife of 25 years, Jo Ellen.
"Jo Ellen is definitely part of promoting Eddie. She vouched for his businesses. She gave us the sense that everything would be all right," said Lee, who has kept detailed notes of her conversations with both Eddie and Jo Ellen.
"You would have to be a dumbbell to live with a man like that for those many years and not know what he's up to," she said. "And Jo Ellen is no dumbbell."
Next: Where's law enforcement?