Published Thursday, December 25, 2003
Investors fear they'll lose millions in alleged Ponzi scam
By DON THOMPSON
Associated Press Writer

SACRAMENTO

More than 5,200 clients across America trusted James Paul Lewis Jr. with their life savings, pouring hundreds of millions of dollars into his Southern California investment funds on the word of a few friends.
Many heard about Financial Advisory Consultants through fellow churchgoers, although professional athletes and at least one movie actor are said to be investors.

As their own retirement accounts sagged with the stock market, they marveled at Lewis' reports of consistently returning upward of 40 percent from one fund and 20 percent from another, year in and year out for two decades.

They scrambled to give him money, any caution or doubts pushed aside as they saw their fellow investors periodically withdraw as much as $250,000.

Their financial future came crashing down this week, when a federal judge froze the company's assets and the FBI carted away documents and computers from Lewis' three-room Orange County office suite.
No charges have been filed, but the FBI alleges Lewis was operating a "Ponzi scheme," in which early investors are paid with money from later investors. The federal Securities and Exchange Commission says the "fraudulent scheme" involved $813 million from more than 5,200 investors.

"It's a house of cards," said Barry Minkow, himself once imprisoned for seven years for defrauding investors through his ZZZZ Best carpet cleaning company. "It will go down as the longest-running Ponzi scheme in history, and the mutual fund that didn't exist."
Minkow, who now works as an anti-fraud investigator for San Diego-based Fraud Discovery Institute, provided state and federal regulators with documents questioning Lewis' legitimacy, also prompting an investigation and story by The Associated Press earlier this month.