Anatomy of a Financial Fraud

How a California investment counselor undermined his victims' futures.

A businessman picking another businessman's pocket

Like Ferlito, Wolff uses the word "lucky" to describe his circumstances. "In absolute concrete terms, I probably could get by without working. I could live OK," Wolff says. "But I'm trying to use this as a stimulus, a kick in the ass rather than a kick in the stomach. I've been talking for years about doing good work that feeds my soul, and I'm trying to make this a learning experience rather than something I'm miserable about."

A third Zubick investor, pediatric dentist Ray Stewart, had agreed to sell his portion of a practice that included four offices in Monterey County when the fraud came to light. He and his wife, Penny, had expected more than $1 million from their investment with Zubick; instead, they lost $600,000.

"I thank God, and do so repeatedly, that I didn't have so much of my portfolio and net worth tied up with Zubick," Stewart says. The Stewarts' daughter and son-in-law, who counted Zubick and his wife among their closest friends, lost their children's $100,000 college fund by investing with Zubick.

Stewart, who also signed a noncompete clause, will now consult for private industry, and this month he'll become executive director of the California Society of Pediatric Dentistry. "We have a lovely home in Carmel with a lot of equity and other property we were planning to sell, and with our 401(k) and Zubick investments we felt very comfortable about being able to get by," Stewart says. "I had already arranged to be bought out, and had I not made those agreements, I would have continued to practice for a few years. We're still in a state of flux in terms of our budget. I would say at least half of our net worth is in real estate, and at this point in time, real estate isn't liquid at all."

Zubick's conviction includes a restitution order of $12.2 million. Through a default judgment in the civil case, Biegel said his clients have reclaimed just over $3 million of their missing funds.

It's expected that Zubick will serve at least 12½ years of his sentence. If that happens, he will be 57 years old when he's released, the age at which many people begin thinking in earnest about retiring.