Late North Bay businessman suspected of multimillion-dollar fraud
Santa Rosa businessman Clay Stephens, the widely respected founder of Warren Capital who died suddenly in November, is now suspected of bilking friends and family alike out of as much as $23 million, according to investors who are discovering the extent of their losses.
Had he lived, Stephens could have faced fraud charges over the collapse of his Novato company, an attorney representing Stephens’ company told stunned investors last week, according to several people who attended the meeting.
The disclosure has left investors feeling betrayed by a man who gave every outward appearance of being a successful businessman, upstanding family man and committed philanthropist. Stephens was active in the Santa Rosa Chamber of Commerce, heavily involved in its BEST job creation program and a past president of the board of Cardinal Newman High School, which his four sons attended.
What no one appeared to have known, however, was that at the time of his death of a heart attack Nov. 10, the 72-year-old Stephens was taking money from investors that was supposed to fund new business loans and instead using it to prop up his company and pay existing investors, according to several people who were briefed last week on the company’s collapse.
“There is no doubt in my mind that if Clay Stephens were alive he would probably be spending the rest of his life in jail, and justly so,” said Fred Ptucha, a longtime Santa Rosa financial adviser.
Ptucha invested his own retirement savings with Stephens and now hopes to receive just 15 to 20 cents on the dollar of his principal, he said. He and other investors are struggling to reconcile their impressions of Stephens as a man of integrity with what attorneys and forensic accountants have learned about his now-shuttered company.
“I just felt Clay was a very upstanding guy that I felt I could really trust,” Ptucha said. “We all got snookered.”
After learning of problems at his company shortly after his death, Stephens’ family hired an attorney and quietly canceled a planned public memorial at Cardinal Newman. The family is devastated by the revelations and had “absolutely no knowledge of any wrongdoing until it came to light” after his death, attorney Scott Palmer said.
“The family is in shock and disbelief and feels extremely betrayed, and at the same time is struggling to mourn Clay Stephens’ passing,” Palmer wrote in a statement.
Two of Stephens’ sons lost a total of more than $1 million they invested with their father, and Stephens even encouraged one to invest another $100,000 over the summer, according to people familiar with the matter who spoke on condition of anonymity. Stephens also had significant debts and drew most of the equity out of the $1 million Bennett Valley home he shared with his second wife, the sources indicated.
“His wife, Anne, is left with a sense of bewilderment, betrayal and anxiety about her future,” Palmer wrote. “At the same time, she is sad and worried for many of her friends who lost money.”
Warren Clay Stephens, an Alabama native and Notre Dame football standout, founded Warren Capital in 1984 after working in finance on the East Coast. The company specialized in brokering alternative financing and leasing deals, particularly of specialized equipment used in the food and beverage and health care industries.