Donisthorpe swindle: Will there be money for Omar? - Albuquerque Journal

Donisthorpe swindle: Will there be money for Omar?

Omar Ramirez, pictured here outside his family’s home in Santa Teresa, is one of about 40 former clients of Desert State Life Management of Albuquerque whose trust funds were embezzled by Desert State CEO Paul Donisthorpe. Ramirez, who has traumatic brain injury, had a $1 million trust from an insurance settlement but learned his money is gone. (Roberto E. Rosales/Albuquerque Journal)

Copyright © 2017 Albuquerque Journal

Just after Thanksgiving, the family of Omar Ramirez rejoiced upon learning that former Desert State Life Management CEO Paul Donisthorpe had agreed to pay $4.8 million in restitution after pleading guilty to pilfering dozens of client trust accounts, including a $1 million trust set up for Omar’s lifetime care.

“I guess there’s going to be Christmas for Omar,” younger brother Armando said at the time in a phone interview. The Ramirez family lives in Santa Teresa, N.M., where their mother cares 24/7 for Omar, who suffered a traumatic brain injury after a 2001 car accident in which he struck an errant cow in the roadway.

“To tell you the truth, I feel like crying,” Armando told the Journal. “… My mom’s going to be so happy.”

But as the year ends, there’s been no restitution paid to Ramirez and some 39 other victims – elderly and mentally or physically impaired clients whose trust accounts were looted by Donisthorpe from 2006 to 2016.

There’s no assurance that any of the victims will recoup all their financial losses, say state officials tasked with liquidating Donisthorpe’s assets, including some 100 head of Texas cattle.

Acting director of the state Financial Institutions Division Christopher Moya ordered the inquiry that discovered more than $4 million from client trust accounts at Desert State Life Management had been embezzled by Donisthorpe.

“I don’t want to paint a rosy picture where everybody thinks they’re going to get every dollar back,” said Christopher Moya, acting head of the state Financial Institutions Division. “But we’re going to try our hardest to get as much as we can.”

Omar’s parents don’t speak English, and the family worried that state regulators some 300 miles to the north in Santa Fe would forget about his loss and its impact on their close-knit family.

Nothing could be further from the truth, Moya told the Journal.

“Omar is our driving force here. He’s the one I keep in the back of my mind every day on this thing. There’s some language barriers there, but he’s the one I think about.”

Donisthorpe takes blame, and his wife walks away

In pleading guilty Nov. 27, Donisthorpe accepted sole responsibility for siphoning millions of dollars from the trust accounts he had managed since 2006, when he took over the nonprofit Desert State, based in Albuquerque.

Paul Donisthorpe

Donisthorpe, 62, was charged in a federal criminal information, then pleaded guilty to wire fraud and money laundering – all during the same unannounced court appearance. He was released pending sentencing, which is set for Feb. 27.

Under the plea agreement, he faces from eight to 12 years in prison, and agreed to pay restitution.

It appears unlikely that criminal charges will be filed against anyone else. “We don’t have a say in that, but I would not believe so,” said Kevin Graham, a lawyer with the state Financial Institutions Division.

Graham and Moya recently spoke to the Journal in their first interview about the case, which began in February after state officials first attempted to conduct an examination of financial records at the nonprofit trust company.

On May 31, after the theft from client accounts became evident, the FID sought an emergency hearing and order for a permanent injunction and receivership of the firm.

Albuquerque attorney Liane Kerr was married to Paul Donisthorpe for 31 years before divorcing him in June. She filed for divorce just as state regulators began an inquiry into the finances of the firm. (Joshua Bachman/Las Cruces Sun-News)

The state also named Donisthorpe’s wife of 31 years, Liane Kerr, in a motion seeking an injunction to prohibit her and others from having any contact or involvement with the business. During the early days of the state inquiry, Donisthorpe couldn’t be located, and Kerr appeared at Desert State offices at 1011 Fourth St. in Albuquerque.

Court records state that Kerr, a criminal defense attorney, told state examiners back then that the two staff members in the Desert State’s office were new and had minimal knowledge of the firm. But FID officials later learned that the employees had been with the company for 10 years. At one point, Kerr told state regulators that Donisthorpe was “legally incompetent.” Reports surfaced that he had brain damage from a stroke or botched suicide attempt. But the FID’s Graham told the Journal he saw no evidence of mental impairment when Donisthorpe appeared at last month’s plea hearing.

Kerr is named as a defendant in a lawsuit filed on behalf of several clients who lost money in the embezzlement. The lawsuit contends she should have known about the mismanagement of funds and directly benefited from the scheme. A one-time friend of Kerr’s who sat on the board of directors for Desert State has accused Kerr of using stolen Desert State client money to buy jewelry, artwork, furniture and property, including a $950,000 luxury lodge in Angel Fire.

Kerr, in court records, denied any knowledge of her husband’s illegal activities, contended she didn’t benefit indirectly or directly and had “never had anything to do with (Desert State).” She filed for divorce March 24.

While the divorce was pending, FID filed a notice to alert the Sandoval County district judge assigned the case about the pending receivership and injunction action regarding Desert State.

In that June 16 notification to the judge, state regulators contended that the assets of the marriage were in question and were more likely than not the product of ill gotten gains by Donisthorpe.

But three days after the state’s filing, state District Judge Cheryl Johnston approved the final divorce decree sought by Kerr. Johnston couldn’t be reached for comment last week, but her final order stated that she had examined all the filings in the case and was “fully aware” of the circumstances.

It wasn’t clear from court records if there was a hearing, in which FID’s attorney could have addressed the court.

The final divorce document shows that Donisthorpe was represented by Robert Strumor, a New Mexico bond attorney.

Donisthorpe had been a CPA and financial adviser on bond matters and other issues for various local governments in the state.

Donisthorpe, in his plea agreement, admitted spending client funds on business ventures, his home mortgage, the Angel Fire lodge mortgage, vehicles, credit cards and to pay off IRS liens.

In the divorce, Kerr kept the couple’s $475,000 North Valley home and received ownership of the $400,000 Desert State office building where she has a law office. Donisthorpe retained the home in Angel Fire, which had a $296,000 mortgage.

Omar remains hopeful

Donisthorpe’s plea was an important first step to putting the liquidation of his assets on a fast track, said Graham of the FID.

“They (federal authorities) can hopefully do within a month time frame what would have taken us years in civil court to accomplish.”

Moya, who is credited with ordering the financial exam despite Donisthorpe’s multiple attempts to delay the inquiry, recalled that state examiners initially thought they would find minor accounting errors.

“We never thought they were going to balloon into what they did,” Moya said.

Moya said Donisthorpe should have had “more of a moral compass,” especially considering how vulnerable his clients were.

“These trusts were set up to provide for them, largely when they couldn’t afford the essential equipment and resources they need throughout their lives,” said FID attorney Graham. “When you go steal from those victims, knowing exactly the situation they’re in, it does seem like you’re doubling down on evil.”

While the sale of Donisthorpe’s properties may reap some money to offset client losses, attorneys for about a dozen victims have gone to court to seek damages against Desert State’s liability insurance.

But the Ramirez family says they can’t find an attorney in southern New Mexico who will join that litigation on Omar’s behalf.

When told by the Journal of Donisthorpe’s plea last month, Armando put his mother, Juanita, and Omar on the phone with a reporter to express their gratitude.

Omar, 35, is able to talk and walk despite his mental impairment. But he lost sight in one eye, is prone to seizures and can’t be left alone.

Omar’s Desert State trust fund was set up with proceeds from a $1.2 million settlement of a lawsuit his family filed against the rancher whose cow strayed onto State Road 28 that night in 2001.

“We’ve been going through a lot the last month with Omar and my mom,” Armando Ramirez said last month. Without the trust payments, he added, “we’ve been helping them financially.”

Omar remained hopeful when he spoke with the Journal last month.

“The bad things are behind us now,” he said. “We want to spend the new year with good things.”

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