SANTA BARBARA COUNTY, Calif. - A Santa Barbara Superior Court Judge awarded more than $710,000 to a Montecito woman who was the victim of a Ponzi scheme.
According to the woman's attorney, Lisa Sands befriended a woman by the name of Barbara "Bobbee" Kellner in her yoga class.
Kellner recommended to Sands that she invest her life savings with Kellner's husband Paul Welterlen who was an alleged successful hedge fund manager who had created a new hedge fund for Montecito investors.
Sands was told that she would receive between 12 and 14 percent in annual returns. She was also told that her money would be safe because of special programs that Welterlen designed.
Sands ended up investing her life savings of $300,000 on September 11, 2011.
Initially, there did not appear to be a problem with Sand's investment. However, in 2013, Sands along with other investors were told that there had been an issue with the IRS and that dividend checks would be delayed.
After receiving that news, Sands panicked and asked for a return of her entire investment, her attorney says.
Welterlen told Sands that she could only remove $100,000 every six months so Sands asked for the first $100,000 right away.
Sands received her money in increments. On the day she was supposed to receive the rest of her money, Welterlen told investors that the fund had blown up and that all of the money was lost.
Soon after this announcement, the Santa Barbara Police Department raided the Welterlen-Kellner Inc. offices as well as PAW Assest Management LLC. to seize bank records, credit card receipts, quarterly reports, and other evidence. Brian Cota, Santa Barbara County Assistant District Attorney, described the whole situation as a Ponzi Scheme.
Welterlen had used money from the scheme to purchase life insurance policies on himself to cover his wife. Those policies covered suicide and he killed himself by stepping in front of a train.
Some investors sued right away but Sands didn't have an attorney at the time. Kellner's attorney offered to return about $11,700 back to Sands instead of the $200,000 Welterlen had promised to return to her. Sands eventually hired attorney John Thyne and took Kellner to court.
In court, evidence was presented that showed that Kellner and her husband were using investor funds to pay for personal expenses, including a luxury vehicle lease, international travel, shopping sprees and more. In a press release sent to our newsroom, Thyne said a letter was introduced as evidence that showed that Bobbee Kellner was paid $3,500 per month to manage the nonexistent hedge fund, despite claims she had no idea about the scam.
Santa Barbara Superior Court Judge Donna Geck awarded $710,000 to Sands. The payout includes $200,000 in compensatory damages, $400,000 in punitive damages, $110,000 in pre-judgment interest and attorney fees.
According to Thyne, Barbara Kellner has fled to Nicaragua where her son lives and where she and her family purchased 13 ocean front acres apparently with investor funds.