RECOUPED INVESTORS' $1.4 MILLION LOST IN GAMBLING SCHEME.

Byline: David Greenberg Staff Writer

Having recovered $1.4 million from a failed investment scheme, a Chatsworth man secretly loaned most of the cash to a neighbor who promised to win big at a New Orleans casino - but lost the money instead.

George Frangie said he loaned $1 million to neighbor Allen Boren in the hopes of maximizing the money he and others had managed to get back from Iris Limited Partnership - an investment group whose founder is under indictment for stock fraud.

Boren had laid out a gambling system that seemed ideal, Frangie said, a sure-fire way to bring in more money. So, using his authority as a director in Iris - and without telling any of the other investors - Frangie last January loaned Boren $900,000 of the partnership's money, along with $100,000 of his own.

``We were friends. We would occasionally see each other at neighborhood gatherings,'' said Frangie, who formerly owned Nissan and BMW dealerships in San Luis Obispo. ``We had a wide variety of conversations regarding sports, our businesses, the stock market. There was definitely a level of trust that had been established between us.

``(The loan) wasn't out of desperation. I felt like there wasn't a chance anything could go wrong.''

But something did go wrong, and Boren's system failed. Now, Iris members - already facing $19 million in losses from their initial investment - have been hit again.

Although acknowledging that Frangie had good intentions when he loaned Boren the money, many of the 400 Iris members are furious at the risk he took.

``It's adding insult to injury,'' said Merrill Blasdel, a Glendale real estate broker. ``It's totally irresponsible. Here's a very legitimate businessman I thought I could trust. I'm really sorry I misjudged his character.''

Frangie and the partnership filed a joint lawsuit in May, seeking to recover their money from Boren.

The complaint says Boren portrayed himself as a high roller at casinos, where he could get an additional 10 percent in gambling chips and a 20 percent discount on significant losses if he laid down $1 million upfront.

Boren promised Frangie he would use the $1 million loan as a form of collateral with the casino, gambling only with the 10 percent bonus and his own money, the suit said. He promised he would return the $1 million - plus $100,000 - within five days.

The suit said that when Boren returned from his trip to The Jazz Club in New Orleans, he claimed he'd been cheated, that $700,000 was lost and that the casino was holding the remaining $300,000 until a number of legal actions involving the parties could be settled.

``Boren acted maliciously, oppressively and/or fraudulently, and with the intent to deprive plaintiffs of their moneys,'' the suit states. ``Had (Frangie) known of defendant Boren's true intentions, (he) would not have obtained the cashiers' checks and given possession of them to defendant Boren.''

Boren, who has since moved from Chatsworth, could not be reached for comment. He is representing himself in the lawsuit, and in June filed a response denying wrongdoing.

``(Frangie) was aware of the risks inherent in the transactions alleged in the complaint yet . . . freely and voluntarily assumed such risks and is barred from recovery on its cause of action against defendant by such assumption of risk,'' the document states.

Frangie said he is optimistic the $1 million will eventually be recovered from assets he said Boren has from a chain of bagel stores.

Boren acquired the 17-store I&J bagel chain in 1992 and later merged it with Manhattan Bagel Co. of New Jersey, records show.

Frangie said Boren's wealth grew immensely after the company, the second-largest bagel chain in the nation at the time, went public.

``He's got the financial resources,'' said Frangie. ``I believe we'll prevail in court.''

Meanwhile, Iris members, most of whom live in the San Fernando Valley and Ventura County, continue their efforts to recover some of the $19 million they lost in what authorities said was a stock fraud scheme run by Jerry Womack, 51, of Las Vegas.

Using two Nevada companies - Iris and Jerry Womack LLC - authorities said Womack established a Ponzi scheme, using money from later investors to pay off early ones under the guise of profits.

Womack is free on $50,000 pending his Feb. 26 trial on 10 felony counts each of money laundering and forfeiture, as well as 12 felony counts of wire fraud.