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'He said there is absolutely no risk'

Leslie Santucci reclaimed $10,000, but will likely lose the $103,000 in corporate notes not backed by real estate.

THE PRESS DEMOCRAT

Published: Sunday, October 5, 2008 at 4:43 a.m.
Last Modified: Sunday, October 5, 2008 at 6:48 a.m.

Healdsburg resident Leslie Santucci received a $138,000 divorce settlement in 2005 and wanted to put it somewhere safe.

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The 48-year-old mother of 8-year-old twins planned to use the money someday to own her own home again.

A travel agent at HMS Travel in Santa Rosa, she describes herself as a "naive investor" but "not a total dunce."

After a family friend referred her to investment adviser Gary Armitage, she knew enough to ask him about the level of risk and was told exactly what she wanted to hear.

"He said there is absolutely no risk involved in their investments," she recalled.

She invested $133,000 with Armitage, putting $103,000 in longer-term investments and $30,000 in a cash account in case she needed to access the money quickly.

Armitage told her she could access the money in two days with one phone call to his office. She successfully made one withdrawal to buy a car. But after she learned of problems with her investments in September 2007, she requested the remaining $10,000.

That's when the battle began.

"I could not get an answer out of Armitage to save my life," she said.

Two days turned into two weeks, which turned into two months of increasingly angry phone calls to Armitage's office.

"My philosophy was I'm going to tie up your phone lines until you talk to me," Santucci recalled. It eventually worked, and she got her $10,000 out of the cash account. But her $103,000 in corporate notes not backed by real estate is likely wiped out.

-- Kevin McCallum


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  1. 707voicedotnet says...
    October 5, 2008 6:51:02 am

    RE: Link

    Is that the complete article?

  2. gratcon says...
    October 5, 2008 6:54:50 am

    Where is Armitage now? Does he still have an office? What is his history?

  3. ryan4864 says...
    October 5, 2008 6:56:56 am

    Thats what happends when you gamble.
    Investments like that are always a gamble.

    I dont really feel sorry for these people.

    I would never give a large sum of money to anyone. I'm always thankful for what I have.

    (Greed is a sin for a reason).

    Thats why I dont feel sorry for these investors..

  4. artperez2 says...
    October 5, 2008 8:20:20 am

    Come on lady, there is always a RISK, thats why its called "Gambling" and it is gambling!!! You say you are not "dumb" but you are, cause you gave somebody you did not know that much money!!!!! I bet you are kicking yourself in the behind now, arent you? And like the others, I dont feel sorry you.

  5. arch stanton says...
    October 5, 2008 9:29:54 am

    An interesting collection of comments from folks that likely have little assets, a poor understanding of capitalism, and no elderly parents (not that Ms Santucci is by any means elderly).

    I will add my own.

    Life is a gamble. Sticking your cash in a mattress is a gamble. Buying gold is a gamble. When you ask someone the level of risk in an investment you should expect a truthful answer (particularly if you paid them for their services). A responsible answer on the part of any investment advisor would be to inform the client that even placing that much money in a (single) bank, although relatively safe, would carry a slight risk due to FDIC insurance coverage. Even T-bills can be victims of inflation.

    Corporate notes (bonds) in general are somewhat safer than stocks. However they must have been issued from companies that engaged in very risky financial behavior to have been wiped out entirely.This is a very unfortunate story. My 2 cents is that Ms. Santucci needs some professional legal advice ASAP, not an article in the paper nor to tie up phone lines.

    The lesson for the rest of us is to be very wary. Good financial advice seldom comes free. The article does not make clear what returns on investment should be expected, but the old saw concerning ??if it seems to good to be true?? is a god one. Protecting your assets is not the same as greed.I have a problem with folks that imply that people have no right to expect honesty from everyone they deal with. It sounds like she was deceived and taken advantage of. It surprises me that any of you would condone this behavior.

    Link

  6. pearlrentals says...
    October 5, 2008 9:45:53 am

    Arguing AGAINST George Bush's attempt to fix Fannie & Freddie... 5 YEARS AGO!

    ?These two entities ?? Fannie Mae and Freddie Mac ?? are not facing any kind of financial crisis,? said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ?The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.?
    Representative Melvin L. Watt, Democrat of North Carolina, agreed.
    ?I don??t see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,? Mr. Watt said.

  7. The Big Dog says...
    October 5, 2008 9:50:45 am

    While those at the bottom of Armitage's pyramid are the real victims and aren't likely to see a dime, for all the investors at all levels the phrase "no risk" should have been the bell.

    All investments have some measure of risk. There are no sure things. Any financial advisor who tells you that there is "no risk" in any investment vehicle should be dropped instantly, as they are either a liar or an outright cheat like Armitage clearly appears to be.

    Human nature is a powerful thing, and charlatans like Armitage prey upon that. His victims have to accept the fact that they have a measure of responsibility in their own financial downfalls, running in parallel with Armitage.

    I wish these folks well in trying to go after his assets, but don't expect to be made whole. Investigate, sue, seize any assets you can find, split his head open publicly for all I care. But look in the mirror first and examine the real source of the problem.

  8. FIDoubleD says...
    October 5, 2008 10:26:03 am

    This article is proof positive that America's education system needs to be reformed to include a mandatory introduction to finance. I am talking about a basic education in: functions of the capital markets, stocks, bonds, mortgages, interest rates, credit cards, and so on. I am surprised we don't have politicians pushing for this type of reform.

  9. nacosta says...
    October 5, 2008 10:58:21 am

    river rock probably has half of it the rest is at sevens.

  10. mgmarley42 says...
    October 5, 2008 3:40:04 pm

    Sophisticated business and professional people are among the investors who were duped...not just vulnerable seniors or trusting friends. Naivete was not the problem as everyone wasn't naive. Greed on the part of investors was not a factor either when you know that the average rate of return was 8% - good, but reasonable - certainly not in the high risk range. Therefore you can't apply the adage "if it sounds too good to be true, it probably isn't". I think it's difficult for anyone to make moral judgments here unless they have first-hand understanding of what went on here. If the attorney general's office says it is wide, deep and very complex, the average reader isn't going to get it either.