Fed investigation signaled Valley Investments’ demise

DENVER — Valley Investments in Grand Junction closed its doors May 20, 2009, after two frantic days in which employees helped owner Philip Rand Lochmiller carry out computers and company files after he acknowledged to them the company was under investigation, an employee testified Thursday.

Shawnee Carver, who has pleaded guilty to one count of conspiracy to commit securities fraud and mail fraud, told a federal court jury that Lochmiller at first told his employees he was shutting down the business, then called them on the night of May 19 to ask them to return to work the next day.

He had a little more time — until June 1 — Lochmiller told his staff, according to Carver.

She told Lochmiller she couldn’t represent the company as being open, knowing it would close June 1, Carver testified. The upshot was, “They closed the business” on May 20, Carver said.

That began the series of events in which more than 400 investors as far away as the United Kingdom learned that Valley Investments, along with $30 million in investor funds, was no more.

Carver said she notarized documents without seeing people sign them, but she said she never notarized a document she knew to have been forged.

At the behest of Lochmiller and his son, also Philip Rand Lochmiller, she told investors the company was thriving when they called to ask about it. Usually following the lead of the Lochmillers, she told them Valley Investments’ niche product of low-income housing was doing well even in a down economy, Carver testified.

“I would repeat whatever junior and senior were saying to investors,” she testified, using the shorthand references to the Lochmillers.

Both Lochmillers could be difficult to deal with, but she looked up to the elder Lochmiller, Carver testified. She had faith the company would survive even after regulators closed it down, she said.

During Carver’s testimony, the elder Lochmiller could be seen writing on a white legal pad, apparently filling several pages with small handwriting.

Pressed by defense attorney Tom Hammond about her plea agreement and the potential benefit of avoiding a prison term, Carver said she was indeed testifying “out of the goodness of my heart. I would have testified without being charged with anything.”

Carver identified both Lochmillers’ signatures on several documents, including a 1985 plea agreement signed by the elder Lochmiller in which he pleaded guilty to securities fraud in California.

The jury was instructed that it could consider the plea agreement only in connection with a current allegation of conspiracy to commit securities fraud.

The younger Lochmiller acted as head of the Valley Investments office with the power to hire and fire employees, and he sometimes presented himself to investors as the owner of Valley Investments, Carver said.

Carver acknowledged she sometimes notarized documents without watching them being signed and did so when directed by the younger Lochmiller.

She said the younger Lochmiller was in charge of installing a new accounting and payment system in the office at 1445 N. Seventh St.

As the local and national economies worsened in early 2009, Valley Investments became a less-pleasant place to work, but employees were not permitted to acknowledge that, Carver said.

“We were told to be positive and energetic” and not to tell investors that business had slowed as much as it had, Carver testified.

A couple in England invested with Valley Investments in 2008 after an email exchange in which she told them the company was selling an average of 10 lots per month, even though she knew that to be untrue, Carver testified.

One investor, Debra Kahn, testified after Carver that she became worried about the prospects for her investments and confronted the elder Lochmiller directly in his office, hoping he would return her investment. She leaned forward on the edge of her chair to impress upon Lochmiller the importance of her investment, Kahn said.

“He made eye contact and held my gaze and said, ‘Your money could not be in better hands,’ ” Kahn told the jury.

Mollified, she left her investment there.

“I was completely taken in,” she said.

Now 58, Kahn said she has taken a job driving a truck in the oil fields of North Dakota in hopes of reassembling the retirement fund she lost with the collapse of Valley Investments.

The trial before U.S. District Judge Philip A. Brimmer is to resume Monday and last four more weeks.


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