Economists say the United States should export its expertise. Scam Diego is doing just that. A couple of rascals who honed their skills in San Diego are now polishing them in other cities.
Alfred Louis “Bobby” Vassallo blew into San Diego in 1994 and dropped names of his supposed friends (such as Prince Albert of Monaco) and promised to give money to the San Diego Opera, getting named to its board in the process. But the money didn’t come. He told investors that his company, Presto Telecommunications, had business ties to blue-chip companies and had a valuable license that would make it Latin America’s premier communications provider. He took in $11 million, but he spent only 16 percent of it on the business; much of the rest went for his personal luxuries. In time, the Securities and Exchange Commission nailed him for fraud and four years ago told him to pay almost $2 million, which he has not done, according to court records.
Now people who know him say he is back in Texas, although his location is difficult to pin down through his multiple websites. He professes to be an expert in, you guessed it, telecommunications, as well as earthquakes, AIDS, and — er, uh — philanthropy.
In 1985, Philip Rand Lochmiller, an official of the by-then-bankrupt Vista-based Lochmiller Mortgage, was sentenced to three years in prison for selling unregistered securities, mostly to elderly North County citizens. His mother, Jo Alice Lochmiller, was sentenced to three years around the same time, and his elder brother, Stephen Reid Lochmiller, had been sent up for four years in 1984. The firm had been promising investors up to 24 percent interest on real estate investments. One of the capers that got them in trouble was lending money for the purchase of Palm Springs homes with artificially inflated values. One of those homes had belonged to Elvis Presley.
Philip Lochmiller is now in deep trouble in Grand Junction, Colorado. The state’s securities commissioner has charged that Lochmiller has been selling unregistered — and fraudulent — securities in the same kind of mortgage business that got him sent to the slammer for his San Diego activities. Through a Colorado company called Valley Investments, Philip Lochmiller promised investors 12 to 16 percent annually. The money would be used to buy or develop land. But the company lied to investors on many counts, says the state, and the court-appointed receiver says it looks like a Ponzi scheme, to wit, “Investor funds were not being used as represented, but rather primarily used to pay debt service to prior and existing investors.”
Investors were promised that lots would be appraised by professionals. But the receiver finds no evidence of appraisals and adds that investor names were often forged. The state securities commissioner makes the same charges, noting that often the liens on a property greatly exceeded its value. And, says the commissioner, Philip Lochmiller did not inform investors of his felony securities-fraud conviction in California.
The FBI is investigating the matter and has set up a hotline for irate investors — again, many elderly. Meanwhile, Philip Lochmiller has closed down the business and moved to nearby Loma, says Gary Harmon, who has been following the case for the Grand Junction Daily Sentinel and can’t get the defendant to respond to him, even in court.
And where is Philip’s brother Stephen, who was the boss at Lochmiller Mortgage? Well, he is in Sacramento, heading a company called Online Fulfillment, which purportedly helps those operating websites to hook up with search engines more readily. Stephen did not return my call. I could not reach Philip. His lawyer did not return my call but has stated publicly that his client was not running a Ponzi scheme but rather ran up against a real estate market in which prices collapsed.
Bobby Vassallo didn’t return two of my calls either. He claims to be a telecom expert with City Wireless Consulting, which appears to be based in the Austin area. He sends out news releases touting his own expertise: “Wireless consulting comes from experience, not from equipment vendor’s promises,” he sneers, warning customers not to be “sold a bill of goods.”
He should know about that topic. According to the Securities and Exchange Commission, he wooed more than 800 investors to plunk money in Presto by saying he had business relationships with AT&T, Sprint, MCI, and Qwest and was a partner with Cisco Systems and Unisys. But it was all false, said the agency. And the Mexican license he touted had no value. He was told to cough up $1.26 million for his ill-gotten gains plus $120,000 in civil penalties, $602,000 in receiver expenses, and almost $24,000 in interest. The money hasn’t come in.
Vassallo had a 6275-square-foot house at 1329 W. Muirlands Drive in La Jolla. The receiver got court approval to sell it, but Vassallo and his wife fought the move up and down the court system. In February of 2007, federal judge Irma E. Gonzalez ruled that the house would have to be sold. It was peddled the next month for $3.68 million, but there was a pile of debt on it. It is not clear if Vassallo sold because of the court judgment or sold on his own. It is also not clear if the receiver netted money on the sale, given the debt on the property. The receiver, Thomas F. Lennon, and his law firm have not replied to requests for information.
Now, in addition to spewing out advice on telecommunications, Vassallo has become a self-professed expert in philanthropy. He doles out advice on a bunch of websites, calling himself “Dr. Vassallo,” the title he claims to have been awarded for an honorary degree from a Mexican institution. On one of his sites are these words: “We want to thank Dr. Bobby Vassallo for his generous donation to this site. Bobby Vassallo is a renowned expert on post-earthquake trauma to urban areas.” Hmmm.
The same Bobby Vassallo who got a seat for himself and his wife on the San Diego Opera board by pledging to give $100,000 for a 2002 opera, then reneging, is now an expert on philanthropy. On one of his sites he advises donors to be certain that “the person you make smile is not the president of a charity, but the intended recipient of your gift. While you are writing your check, that president might be flying around on the foundation’s jet, sipping martinis, heading for the foundation’s yacht. It happens, I’ve seen it. Donate wisely.” Hmmm again.