Valley owner silent at hearing
Investment firm under scrutiny in Denver court
Valley Investments had $21 million in debts at the end of its last fiscal year, Sept. 20, 2008, its former chief financial officer testified Thursday.
It took him only four months to see that the company was in deep financial trouble, Richard Langley testified in a hearing in Denver District Court.
The court-appointed receiver for the company is seeking control of assets believed to have been purchased with company money but owned by the owner or employees of the company.
Langley testified that shortly before he resigned in October, his relationship with Valley Investments owner Philip R. Lochmiller Sr. was minimal.
“We virtually stopped speaking,” Langley said. “They didn’t like a lot of the questions I asked.”
Lochmiller and his son, also Philip R. Lochmiller, and their spouses, are contesting the receivership’s efforts to gain greater control of company and personal assets.
Overshadowing the civil procedure in district court is the continuing criminal investigation into Valley Investments by state and federal authorities.
Philip R. Lochmiller Sr. sat stone-faced during the first day of the hearing as an attorney ticked off a series of questions about his operating of Valley Investments.
Lochmiller was expected to invoke the Fifth Amendment right against self incrimination and answer none of the questions. In the end, Lochmiller said nothing about the Fifth Amendment, but answered only the most minimal of questions.
Lochmiller, 61, previously served three years in a California prison for securities fraud, and state officials have alleged in district court he was selling unregistered securities in Colorado through Valley Investments.
Valley Investments was taken over by the receiver, Rider & Quesenberry, in May after investigations by the Colorado Securities Commissioner and FBI.
Lochmiller is now the target of a federal grand jury investigation, his attorney, Cliff Stricklin of Denver, told the Denver District Court. A transcript of Lochmiller’s testimony “is going to the task force” conducting a criminal investigation into Lochmiller’s activities, Stricklin said.
Attorney Cecil Morris, who represents the receivership, for more than an hour read a series of unanswered questions into the record while Lochmiller, his sunburned face impassive, said nothing. Lochmiller confirmed his identity and address, and that he operated Valley Investments. Then, Stricklin stopped him from answering any more questions.
Lochmiller contends that the receivership is overstepping its bounds by seeking control of personal assets held by him, his wife, Donna Sue, and his son and daughter-in-law, Philip Rand and Rebecca Lochmiller.
Though he is often referred to as Lochmiller Sr., the elder Lochmiller said he doesn’t go by that name. Then, his attorney interceded.
The younger Lochmiller was not present at the hearing, but his wife was, and they were represented by an attorney. The receivership is preventing Lochmiller Jr. and his wife from selling their Grand Junction house, their attorney said. They have moved to Overland Park, Kan.
The elder Lochmiller made no comment as Morris asked several questions about the sale of a lot in Country Living Park in Mack, which he developed, and about a condominium unit he purchased in Mexico.
Morris asked him whether it was true he had piled up $2.7 million in notes receivable to Valley Investments “to which you never paid a dime?”
Morris also inquired for the record about the proceeds of the sale of a lot in Country Living Park for which he received a check for $136,800.30, which he deposited into his personal bank account.
He also was asked about two separate $100,000 wire transfers from Valley Investments accounts to Mexico for the purchase of the condominium unit there.
Lochmiller left the court immediately after he was excused from the witness chair.
He previously declined to speak to a reporter.
The hearing is scheduled to continue this morning.