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Retirees who invested millions with the Lake Worth company are frustrated as the state charges that the notes were unregistered securities.
By HELEN HUNTLEY
© St. Petersburg Times, published April 19, 2000
Retirees who thought they were getting high yield and safety now are anxiously waiting to find out what happened to the millions of dollars they invested with U.S. Capital Funding Inc., a Lake Worth company that promised returns of 9.25 percent to 12 percent.
The Florida Department of Banking and Finance said Tuesday that U.S. Capital has defaulted on payments to investors, as many as 300 of whom bought up to $50-million of the company's high-yield notes. Many Tampa Bay retirees invested in the notes through Suncoast Financial Services in Clearwater, which did not answer its telephone Tuesday.
The department filed an administrative complaint against U.S. Capital and its predecessor, Asset Base Management Inc.; owner Raphael Raymond Levy; and Levy's daughter, Ronalee Levy Orlick, the company's former president.
The state, which is seeking a cease-and-desist order, said the notes were unregistered securities and the claims made to sell them were not true. The department said it has received complaints from 51 Florida investors.
"It makes me sick to my stomach," said Dale C. Schimming, 80, who said the $100,000 he invested in June represents his life savings. The retired oil refinery worker, who lives in St. Petersburg, has been trying to get his money back since October. He said Levy will not return his telephone calls.
A woman answering the phone at U.S. Capital said the company and its officials would not comment.
U.S. Capital sold six-month notes with a minimum investment of $25,000. The company claimed that it bought only receivables that were either backed by the government or insured by an A+
rated insurance company.
"It was a bunch of lies," Schimming said. "I believe I'm really going to be taken to the cleaners on this."
Levy also owns American Benefits Services Inc., which sold viatical settlements in conjunction with Financial Federated Title & Trust. Federal prosecutors say those investors have lost most of their money to fraud.
Financial Federated and its top officials are awaiting trial on federal charges, but Levy and American Benefits were not charged in that case.