Oakmont widow says she trusted adviser with $700,000

<p>Lynn Luthi turned over her life savings, nearly $700,000, to Santa Rosa investment adviser Gary Armitage in 2005.</p><p>Today, the 84-year-old widow has no idea how much, if anything, remains.</p><p>"I would be amazed if there's anything there," Luthi said from her Oakmont home.</p><p>Last month, the state Attorney General's Office notified Luthi it was investigating fraud allegations against the company that Armitage entrusted with much of her investments, Asset Real Estate and Investment Co.</p><p>Armitage, founder of AGA Financial on Challenger Way in Santa Rosa, invested $400,000 of her savings into AREI, according to a document he provided to Luthi.</p><p>Following a flurry of lawsuits claiming he defrauded investors, Armitage told clients earlier this month he was closing the business.</p><p>Last week, Luthi received another troubling letter, from the company that manages her individual retirement account. The firm, Fiserv, informed her that because of the investigation into AREI, it didn't know what the balance of her IRA was.</p><p>The letter said it considered information about her investments "unreliable." Her new balance, the company said, would be listed as "not applicable."</p><p>"We greatly sympathize with the concern this troubling situation raises for you," the letter read.</p><p>Luthi sought help from Armitage when her husband, Bill, was dying of brain cancer.</p><p>A manager at Fireman's Fund insurance company in Novato for years, Bill Luthi had always handled the couple's finances. After he retired, they moved from Alameda County to Cloverdale in the 1990s and then to Oakmont when his health started to fail.</p><p>When it was clear Bill might not survive, Luthi realized she needed to prepare to handle the finances alone, she said. A local attorney referred her to AGA Financial.</p><p>Her goal was to put her nearly $700,000 in savings into low-risk investments that would be safe but still earn enough interest to allow her to live comfortably, including traveling occasionally to see her sister in Michigan, she said.</p><p>At first, Armitage put her at ease. He met with Luthi at her home, reviewed her portfolio and assured her he could generate better returns than the 6 percent she was earning with Schwab, she recalled.</p><p>"In the first meeting, we both were absolutely agreed -- no risk," Luthi said this month. "He called it as safe as any investment could be."</p><p>Luthi agreed to turn the entire value of her investment accounts over to him. She paid little attention at the time to the kinds of investments he proposed because she trusted him, she said.</p><p>"It's like a car: I don't need to know how the transmission works," she said recently from a home filled with treasures from a life spent traveling the world.</p><p>But after the interest payments on her investments stopped last year, she began asking questions. Armitage was difficult to get on the phone, and when she did, all she got out of him was "gobbledygook," she said.</p><p>"He was always reassuring me when I was questioning what I had," recalled Luthi, who doesn't have any family members she can count on for help. "He said, 'You don't have anything to worry about.' "</p><p>Now she's plenty worried. Her attorney and a financial adviser have told her the AREI investments are likely worthless.</p><p>Luthi was counting on that money to help her live her golden years in relative comfort, but now she doesn't know what her financial future holds.</p><p>Luckily, she has part of her husband's pension and Social Security benefits and owns her home outright. Nevertheless, she's staring at steep, if not complete, losses of her investments.</p><p>"It's taking a toll on me," Luthi said. "I think to myself, this is the rest of my life, and it's stressful."</p><p>You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.mccallum@pressdemocrat.com.</p>