SEC: VALLEY INVESTORS LOSE IN SCAM RESTITUTION SOUGHT IN CASE.

Byline: David Greenberg Staff Writer

The Securities and Exchange Commission has filed a civil complaint against a machine shop repairman, accusing him of defrauding nearly 400 San Fernando Valley and Ventura County residents out of $19 million in a bogus stock scheme.

Jerry Womack, 51, of Las Vegas is already under indictment on felony money laundering and wire fraud charges. Authorities say he sold partnerships in two Nevada investment companies that were not registered on Wall Street.

The SEC's complaint, filed Monday in U.S. District Court in Los Angeles, seeks an injunction against Womack to prevent further violations of securities laws, as well as restitution for investors and an undetermined amount of civil penalties.

``He does epitomize what people should be looking out for,'' said Nick Morgan, the SEC's case prosecutor. ``He breached the trust of his investors. Rather than investing the money as he said he would, he was using the money for personal expenses.

``Jerry Womack did not have any sort of expertise in this area - no special training or education - and yet investors were willing to entrust him with approximately $19 million. This case really demonstrates the need for investors to investigate the people they entrust with their money.''

Patrick Maginnis, Womack's lawyer, said his client has done nothing wrong.

``I think he is being railroaded here, quite honestly,'' Maginnis said. ``I don't think Jerry did anything wrong in this whole operation. Jerry's a very decent man, he's a very likable man and he's a very smart man.''

According to authorities, Womack promised incredible profits to approximately 400 investors - most from the Valley and Ventura County - who gave him what was, in some cases, their life savings for day trading on short-term market trends.

Instead, through Iris Limited Partnership and Jerry Womack LLC, he invested only about a quarter of the money he received from August 1997 through June 1999, officials said.

Investigators say Womack set up a Ponzi scheme using money from later investors to make payments to early investors under the guise of profits.

The remainder of the money was used for his personal nest egg and a free-spending lifestyle that included homes in Las Vegas and Florida, luxury cars, a boat and expensive jewelry, authorities say.

Womack even spent $214,600 in an attempt to salvage an online pornography business owned by the ex-husband of his third wife, investigators said.

``That's clearly not what the investors had in mind when they entrusted him with their money,'' said Morgan.

Womack was indicted by a federal grand jury last October on 10 counts each of money laundering and forfeiture, as well as 12 counts of wire fraud.

He is free on $50,000 bail, pending his Feb. 26 trial.

If convicted of all charges, he faces up to 120 years in prison and $20 million in fines, said a spokesman for the U.S. Attorney's Office, which is prosecuting the case.

A separate SEC trial would likely begin after the criminal trial, officials said.

The FBI, which launched the initial investigation on Womack, continues its search for the victims' money that may not have been spent, and for assets the agency can seize. Initial estimates set losses at $16 million.