Gary T. Armitage, a former Santa Rosa investment adviser accused of helping bilk North Coast residents out of hundreds of millions of dollars, has reached a plea bargain with prosecutors on the eve of his long-delayed trial.
The Healdsburg native and former owner of AGA Financial on Friday pleaded no contest to four felony counts in Shasta County Superior County in exchange for a 10-year prison sentence, according to the state Attorney General's Office and news accounts.
Armitage, 62, and alleged co-conspirator James Koenig of Redding were facing a lengthy trial set to begin Jan. 29 and the possibility of more than 50 years in prison each.
Under the plea agreement, Armitage entered pleas to conspiracy and securities fraud, according to an email alert sent by the Attorney General's Office to victims.
It is unclear if he will testify against Koenig, but the email suggested the agreement could speed what had been expected to be a five-month trial.
The case, with 2,000 victims statewide, is considered one of the largest Ponzi schemes in state history.
Armitage, Koenig and Jeffrey Guidi were arrested in 2009 after a 17-month investigation. Then-Attorney General Jerry Brown said the men "callously swindled thousands of individuals out of $200 million to bankroll their extravagant lifestyles."
North Coast victims took little solace in the plea deal.
"He deserves it," said Lynn Luthi of Oakmont, who lost the entire $700,000 nest egg she placed with Armitage.
Luthi said she has been forced to take out a reverse mortgage on her home to survive. Money today is tight, but "it's holding out because I'm so old," said Luthi, 89.
Armitage's defense attorney, Scott Wippert, did not return a call or email for comment.
Armitage will be required to pay restitution on any securities sales he brokered after April 1, 2007. But he is bankrupt and is not known to have any assets, according to the Attorney General's Office.
His sentencing is scheduled for April 8 in Shasta County Superior Court.
Kathy Adams, 69, of Healdsburg said the sentence strikes her as light given the long trial delays, stress and financial burdens it has put on her and hundreds of other investors.
"It hurts big time when you've lost as much as I have," Adams said.
Adams, who considered herself a close friend of Armitage's wife, Nell, placed her entire retirement savings of $600,000 with Armitage. She said she doesn't know how much she'll be able to recover, but she is fighting back.
She was part of a group of investors in a senior living center in Arizona who wrested control of it away from Koenig. The facility was severely mismanaged, with taxes and the mortgage unpaid and maintenance problems ignored, she said.
Marin County investor Dee Sunderland also said she thought Armitage was getting off easy compared to sentences of more than 100 years handed down to such swindlers as Bernie Madoff and Allen Stanford.
"I don't think 10 years is enough for what he's done to people's lives," Sunderland said. "I think he should have to do at last 20 years."
Sunderland lost at least $240,000 of the more than $600,000 she invested with Armitage. When things started going south, she and others tried in vain to get straight answers out of him or anyone else at AGA Financial, she said.
"He told so many lies I can't even remember them," she said.
Armitage succeeded in convincing hundreds of investors to sink their money into real estate deals put together by Koenig's Redding investment firm, Asset Real Estate Investment.
During the run up of the real estate market, there were plenty of new investors looking for steady retirement income and ways to shield investments from capital gains taxes. Victims, many of them seniors, said Armitage assured them their money was safe and would earn them steady monthly returns of 8 to 12 percent.
But after the housing bubble burst, new investors dried up and investors stopped receiving monthly payments. Lawsuits followed accusing Armitage of placing their money into unsuitable investments, lying about the risks involved and cheating them out of profits.
Prosecutors say Koenig and Armitage conspired to hide the fact that Koenig had been convicted of felony mail fraud in the 1980s.
The men spent more than two years in jail but were released last year when their $3 million bail was reduced. Guidi, Armitage's longtime business partner, previously pleaded guilty to a misdemeanor. He agreed to repay three investors nearly $300,000 in restitution and gave up his broker's license for three years.
Adams said that on balance she holds Koenig more responsible than Armitage.
"I think that Koenig sucked him in and he went along with it and he got in deeper and deeper and didn't know how to get out," Adams said. In the end, he decided to lie to existing investors and find new ones to "rob Peter to pay Paul."
You can reach Staff Writer
Kevin McCallum at 521-5207 or kevin.mccallum@
pressdemocrat.com.
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