FBI Bank Fraud Probe Centers on Ex-Official : Empire: Olen B. Phillips-- airline pilot, church official and philanthropist--is also under investigation by Ventura County and state authorities.

Olen B. Phillips, the son of a Texas sharecropper, built a multimillion-dollar real estate empire in Los Angeles and Ventura counties that paralleled the growth of the Ventura Freeway corridor in the last two decades.

An airline captain, a bank director, a church official and a philanthropist, Phillips rose steadily to power as both a businessman and a civic leader in the Thousand Oaks and Westlake Village areas.

But today, Phillips--described by his minister as a genius and “one of the finest men I’ve ever known”--faces widespread allegations of fraud and investigations by county, state and federal officials.

In addition to his real estate business, Phillips was a stockholder and one of the directors of the now-defunct United Community Bank of Thousand Oaks, the parent company of Westlake Thrift & Loan of Westlake Village, which went out of business in 1988.

The Times has learned that the FBI, which already has spent almost two years probing the involvement of Westlake Thrift in a massive phony loan scheme, is now investigating Phillips for possible bank fraud in connection with United Community Bank’s role in Westlake’s troubles. Phillips was also on the board of directors of Westlake Thrift.

The FBI will not confirm or deny an investigation of Phillips. Already convicted in a probe of Westlake Thrift is its former president, Steven Smith of Thousand Oaks, who last December pleaded guilty in federal court in Los Angeles to charges of conspiracy, fraud and misapplication of bank funds.

On another front, however, the Ventura County Sheriff’s Department says it is investigating the 50-year-old pilot, who lives in Westlake Village, on allegations that he defrauded investors in real-estate holdings he controlled. Many of the complaints under investigation were made by those who purchased “trust deeds,” or gave Phillips cash loans in exchange for claims on property.

County investigators are attempting to trace what happened to “at least $30 million” in missing funds, according to Sheriff’s Sgt. Pat Buckley. In many cases, Buckley said, the missing money represents the life savings of investors who knew Phillips personally and trusted him, or who had heard of his seemingly impeccable reputation.

“This will probably be the largest fraud in this county’s history,” said Buckley, who estimated that as many as 2,000 investor-victims throughout Southern California may be involved.

In addition to those investigations, the California Banking Department recently concluded its own investigation of United Community Bank, which the state closed last December for lack of funds. That report has been forwarded to the Ventura County district attorney’s office, officials said.

State banking officials suspended Phillips from his duties at the bank and barred him from its premises in November. The bank’s former chairman, Phil Chase, was also suspended by the state. The Times has learned that Chase is also under investigation by the FBI for possible bank fraud.

Since his troubles began to mount, Phillips has avoided comment on the growing furor. On the advice of his attorneys, Phillips declined to speak with The Times. His attorneys also declined to comment, noting that no charges have been filed.

Interviews with Phillips’ friends and associates, and court records, however, provide a portrait of an ambitious juggling act that led to success as well as trouble.

According to those interviewed, Phillips would fly for United Airlines, then return home to Westlake Village and his Agoura Hills-based company, Phillips Financial Group, to oversee dozens of limited partnerships and their plans to turn raw land into offices, homes and profits.

Even those who are critical of Phillips today admired his ability to win investors’ trust with an affable “country boy” style.

“People were falling all over themselves to give him money,” said one former client and employee, and others said that Phillips’ job as an airline pilot enhanced his image as a stable, responsible businessman deserving of confidence.

“He’s very soft-spoken,” said another client. “Has a nice family, is a member of the Baptist church, a pillar of the community--certainly the type you would trust.”

Phillips settled in the Conejo Valley in 1966, according to published accounts, and obtained his real estate license while a rookie pilot on stand-by schedules. He worked for a broker between flights and, in 1969, started his own business, Westoaks Realty, with fellow real estate agent Richard Principe.

As the business grew into a top area firm, so did Phillips’ prominence in the community, where most people called him “O.B.” He was active in the Rotary Club, several sources said, and gave generously of his time and money to a variety of local charities. With his three children and wife, Caroline--his high school sweetheart--he attended church regularly, lending his expertise to First Baptist’s building and finance committees.

Phillips was twice elected president of his denomination’s statewide organization, the California Baptist Foundation, and he is a benefactor of California Baptist College in Riverside, according to the Rev. Ron Wilson, pastor of First Baptist Church of Thousand Oaks.

“You’re talking about an upstanding citizen,” said Wilson, who called Phillips “one of the finest men I’ve ever known.”

Wilson and others described Phillips as a workaholic who lived well but not ostentatiously. He seemed to derive his pleasure from his family, from flying and from occasional trips up the coast in a recreational vehicle. A son of Texas sharecroppers, trained to fly in the military, Phillips never put on fancy airs and was equally considerate of men rich and poor, Wilson said.

In 1986, Phillips and Principe ended their partnership amicably to run their own companies. The assets of Westoaks Realty were divided, and Phillips started the Phillips Financial Group.

Observers marveled at how quickly Phillips re-established himself, setting up not just one firm to oversee a series of investment syndications but seven other companies to handle virtually every aspect of real estate development. Under the umbrella of the Phillips Financial Group, Phillips operated Boardwalk Escrow, HomesWest Realty, Phillips Property Management and Westlake Mortgage Inc., among other companies.

All the while, Phillips was flying wide-bodied jets for United, was serving on the board of United Community Bank and was active in his religious and civic concerns.

“I think the man’s a genius,” Wilson said. “To be able to do all the things he’s done over the years, a normal person couldn’t do that.”

But, looking back at Phillips’ business--the headquarters of which, at 30101 Agoura Court, was raided by sheriff’s deputies Dec. 15--former clients and employees now say the “financial group” was poorly run in Phillips’ absence.

Lavish monthly breakfast meetings, which Phillips would lead with a prayer and a motivational speech, could not mask his apparent lack of involvement in day-to-day operations, said former employees. Nor could the daily inspirational sayings left on their desks quell fears that few if any of his companies were turning a profit.

“You were lucky if you got to talk to him, and then you got the impression he wasn’t up on anything,” one real estate agent said.

That source and others said there was pressure to “cross-patronize” related subsidiaries--urging condominium buyers to use Boardwalk Escrow and Westlake Mortgage, for example, or referring commercial tenants to Phillips Property Management. They also said there was pressure to recruit investors, either as limited partners or trust deed buyers.

Those who gave Phillips money include fellow airline pilots, physicians, retirees, schoolteachers and Phillips’ own church. As word of his troubles have spread, so have tales of financial ruin.

One Los Angeles policeman, a 38-year-old father of five, claims he may have lost $475,000 that was to have built his family a new home. The police officer, who asked not to be named, said he invested in four trust deeds last August, after the sale of his old house, because he was lured by promises of high returns.

“My money will never go into anything but a bank,” the officer promised himself recently, then added, “But I may never be in a situation to do that again either.

“In terms of building another house and providing my family with some of the dreams I had, those are non-existent now until I get some money.”

Many of the allegations now surfacing against Phillips were foreshadowed in a Superior Court lawsuit filed by Principe last April, eight months before it was known that Phillips was under criminal investigation.

Principe, who remained a general partner with Phillips in several investment groups, claims in his suit that Phillips commingled funds among limited partnerships, failed to record trust deeds he issued to secure loans, borrowed money on behalf of partnerships without authorization and drove many into debt.

Principe also claims that Phillips was evasive when asked questions and refused to provide full access to financial records--the type of behavior that prompted other investors to contact the Sheriff’s Department last summer and fall, according to Buckley and investors. Late interest payments and bounced checks also triggered complaints, they said.

Principe’s suit claims that, in one example of Phillips’ alleged mismanagement, 184 trust deeds totaling more than $3.4 million were not recorded with Ventura County for months--and in some cases years--after they were signed.

As another example of possible mismanagement or fraud, Principe’s suit also cites “unidentified accrued expenses in the amount of $222,257” on one Thousand Oaks property.

“There are so many holes and discrepancies between the records of the defendant, the title reports and the records of the plaintiff that it is virtually impossible to tell with any certainty at this time the financial condition of the partnerships,” Principe claims in court papers filed earlier this month.

Phillips’ attorney, Richard M. Hoefflin of Encino, declined to discuss Principe’s lawsuit or to comment on at least eight others that have been filed by other investors against Phillips since news broke of the Dec. 15 raid on his office.

The evidence seized is so vast and so convoluted, Buckley said, that it could be months before any charges may be filed against Phillips or his company’s officers.

“For many, it was shock, just absolute shock,” Steven Rubinstein, executive director of the Conejo Valley Chamber of Commerce, said of the raid. “To people involved in the financial market, some nodded their heads who felt he could have been overextended on the properties he had, plus his involvement in United Community Bank.”

“I would say over the years he’s been responsible for the management of 50 or 60 partnerships,” said another area businessman, “and at least 90% of them closed out and gave returns equal to or better than projected. . . .That’s why this was a surprise to everybody, because he’d done so well for so long.”

Phillips still flies for United Airlines, but he returns home to a significantly scaled-down operation in a smaller office in Thousand Oaks. He has been voted out of at least two partnerships, according to court records, and his former headquarters on Agoura Road is the subject of a bankruptcy proceeding.

He has been flying on a weekend schedule, Wilson said, “so he can spend most of his time during the week trying to sort out this business.”

Several investors said that they have spoken in person with Phillips, and that he has promised to straighten out a tangle of debts and paralyzed deals and repay as many people as possible. To that end, he recently retained the Santa Monica real estate firm of Kibel, Green, which specializes in salvaging troubled real estate ventures, a company official confirmed.

Wilson, expressing a faith in Phillips that some others have abandoned, predicted that the pilot will rise again.

“Not only do I think he’ll be vindicated,” said Wilson, “but, knowing him, I think he’ll rebuild.”