Couple Guilty in Ponzi Scheme That Bilked L.A. Schoolteachers

A Lancaster couple were convicted Tuesday in a Ponzi scheme that bilked about 800 people--most of them Los Angeles schoolteachers--out of $18 million, according to authorities.

David Missman, 60, and Karen Missman, 47, used their connections in United Teachers Los Angeles, the union representing city schoolteachers, to lure victims, said Deputy Dist. Atty. Richard A. Lowenstein, who prosecuted the case.

David Missman was convicted of 48 counts and his wife of six counts of grand theft, sale of unregistered securities and making a false misrepresentation in the sale of a security.

“It’s not over,” said Andrew Stein, the attorney for David Missman, who along with Mark Brandt, Karen Missman’s attorney, said he would appeal the convictions.

Said Brandt: “[Karen Missman] was really innocent in that she was just an office worker. . . . She was probably filed on because she was the wife of David Missman.”

Prosecutors alleged that the couple operated the scheme from their San Fernando Valley-based businesses, S.C.S. Co. and MKA Limited / MKA Corp. They used fraudulent property loans and sold promissory notes, according to authorities.

Much of the investors’ money was used by the couple to buy luxury cars, property and to travel, according to court records. Using classic fraud techniques, some of the money was used to keep the scheme operating as well as to pay off some of the initial investors, Lowenstein said.

According to authorities, the scheme operated from 1979 to 1987. The two salesmen were Hank Springer, a former UTLA president, and Nate Glazer, a former teacher and union member, Lowenstein said. The two men were not charged because they agreed to cooperate with authorities.

The couple found customers partly by advertising the investments in the teachers union’s publication, the United Teacher, as well as the Jewish Bulletin.

Authorities said the scheme finally fell apart in February 1988 when it ran out of new investors and no money was available to pay old investors.

The same month the Department of Corporations instituted involuntary bankruptcy proceedings against the Missman firms, according to the district attorney’s office.

The criminal case was filed in 1989 after an investigation by the Department of Corporations and the Department of Real Estate.

The eight-year delay in bringing the case to trial was due to a host of problems, including the death of an investigator and the retirement of a prosecutor in the case, according to Brandt.

Tuesday’s convictions came after a five-week trial and 24 days of deliberations, Lowenstein said.

The jury deadlocked on 43 counts against Karen Missman. Jurors also deadlocked on 17 counts against David Missman.

Lowenstein said a decision on whether to retry the couple on those counts would be announced at the sentencing hearing Aug. 15.

David Missman faces up to 10 years in prison, according to the district attorney’s office. Karen Missman faces up to five years.