Justice Waits

Sentencing delayed again for Wes Rhodes, who bilked at least $24 million from investors

By todd murphy

The Portland Tribune, Apr 25, 2008, Updated Oct 30, 2009 (57 Reader comments)

L.E. BASKOW / TRIBUNE PHOTOS

Wes Rhodes, seen this week in Oregon City with a car key in the hand of his supposedly injured arm (inset), scrambled to put the arm back in its sling when he saw the photographer.

He stared straight ahead.

People he had known for 10 years, 20 years — people he had once called friends but whom he had swindled out of millions of dollars — packed the three rows of court benches directly behind 56-year-old Charles Wesley Rhodes Jr.

But the silver-haired Rhodes never looked at them.

They had come — many of them nearing retirement age, or past it — to this federal court hearing on Monday, as they had come to any of a number of court hearings concerning their former “friend” during the past 19 months.

They had come to watch, as Rhodes continued to try — in their minds, at least — to wriggle free. To avoid the justice they’ve been awaiting for nearly two years.

Fifteen minutes later, the hearing was over. Rhodes, whose second attorney had told the judge six weeks ago that they no longer could work together, had been appointed a new lawyer.

Rhodes pleaded guilty in August on mail fraud and money laundering charges — in a case that involves what prosecutors say was the theft of tens of millions of dollars in a Ponzi scheme that is among the largest, if not the largest, ever seen in Oregon.

But with the appointment of a new attorney, Rhodes’ sentencing, which first had been set for November 2007, then set for early this month, was pushed back again. Another six months, to October of this year.

And with that, Charles Wesley Rhodes Jr. — everyone knows him as Wes — was free to go. He walked past the people still standing in front of the courtroom benches — avoiding eye contact with any of them — and out of the room, to the first elevator door that would open.

He and his attorney stepped inside. The lawyer pushed an elevator button. The door closed.

And Wes Rhodes was gone. Yet again.

Rhodes’ clients all remember the moment — on Sept. 22, 2006, or maybe the day after — when their lives changed forever.

When their retirement dreams, their children’s inheritances, their grandchildren’s college funds, were vaporized — instantly — as if they had put everything they owned onto one horrifically bad bet. Which, unwittingly, they had done.

The federal Securities and Exchange Commission obtained a court order Sept. 21, 2006, freezing all assets of Rhodes and three investment companies he controlled.

The SEC said then that Rhodes, with an office in Lake Oswego, had operated, in essence, a Ponzi scheme that had bilked his client investors out of more than $13 million.

The financial receiver appointed by the court to investigate Rhodes’ assets and financial records estimated last year that the stolen money actually amounted to at least $24 million, probably more. The receiver could only examine detailed records back to 1998.

But assuming there’s not a large amount of money hidden someplace — which some investors still wonder about — all but a few million dollars is gone.

Where?

To Wes Rhodes’ remarkable spending over the past decade or so, on himself and his wife, according to court and receiver’s records.

Between 1998 and September 2006, according to the receiver’s investigation, Rhodes had used his investors’ money to spend more than $3.2 million on luxury and exotic cars, more than $2 million on loan and credit card payments, and more than $418,000 on mortgage payments on a $1.1 million house in West Linn he owned until his fraud was discovered.

In total, he and his businesses spent more than $18 million in that eight-and-three-quarter-year period — excluding the $1.6 million he spent on his company’s payroll.

While the numbers are staggering, what matters to many of Rhodes’ former clients is not a number, but a word: everything.

Many of Rhodes’ clients had been with him for years, and had slowly transferred most of their assets to sometimes vaguely described “stock” or “bond” or “diamond portfolio” accounts with him.

Dick Helmberger and his wife owned a print shop in Beaverton until they decided they could sell it and retire in September 2005. All the money from the sale proceeds went into their “accounts” with Rhodes, which ended up being “well over a million dollars,” Helmberger says. They moved to Marietta, Calif., to enjoy their retirement.

Since September 2006, the Helmbergers have had to leave high-cost Marietta and move to Las Vegas, where Dick Helmberger has struggled to find work. After trying to sell furniture for a while, he now sells fuel and oil for an oil company.

“We worked so hard for so many years,” Helmberger says. “And boom — all gone.”

Neither the court-appointed receiver nor prosecutors in Rhodes’ criminal case returned phone calls to talk about the case. A man who answered a phone number that Rhodes had listed on a police report also declined to comment.

“If you got my phone number, you got it improperly — it’s unlisted,” he said. “I have no comment. I’m sorry, I can’t help you. Have a good day.”

Rhodes’ newly appointed attorney, Michael Levine, also declined to comment.

This story of Rhodes — and how he’s been able to stay out of prison more than a year and half after that SEC September 2006 action, even while attempting to hide assets and having been found in contempt of court — was put together through voluminous court records, receiver reports and interviews with several former Rhodes investors.

It’s a story with plenty of strange twists, especially in the months since Rhodes actually pleaded guilty.

But it’s also a story a bit different from similar stories of schemers and the people financially devastated by them.

Rhodes generally didn’t promise anyone they would get rich quickly with him, according to several of his former investors. His scheme didn’t play out in a year or two or three, or require a constant churning of new investors to keep it afloat.

Rhodes stole money, undetected, over a much longer period, from people he had known, clients he maintained, for years, even decades, court and receiver’s records say.

The investors interviewed for this story said that they remember things they wished they had taken better note of at the time. Rhodes often would be resistant whenever they wanted to make a large withdrawal, or would plead that it would take time for him to free up the money.

He often would suggest they withdraw money from the Charles Schwab accounts he had set up for them (legitimate accounts), instead of withdrawing from the “private” stock or bond accounts he supposedly maintained in their name — which court and receivership records say is how Rhodes stole the money.

But every three months, the investors would get statements from Rhodes, showing how their investments were doing — statements that looked reasonable but that, at least regarding the “private” accounts, were fiction.

Court records and the receiver’s report indicate that much of what Rhodes did followed the classic script of a Ponzi scheme. Most of Rhodes investors’ money was intermingled.

When an investor would request a “withdrawal” of money, Rhodes would find it someplace among his accounts to pay it.

The receiver’s report also said Rhodes’ statements to investors often showed rates of return “in excess of 25 percent.”

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