The collapse of a Spokane Valley company may cost investors millions, and federal officials have been called in to investigate.
D.L. Ward & Associates Inc. filed bankruptcy last Tuesday. A telephone recording at the company’s East Broadway offices says the business has been shut down and its records given to officials of the U.S. Bankruptcy Court in Spokane.
A notice sent to investors and creditors last week by the company’s attorney says Ward is insolvent and beyond reorganization.
A notice from the court says there are no assets available for the repayment of unsecured creditors.
In a motion filed with the court, trustee Dan O’Rourke asked that an attorney be appointed for creditors with the objective of “pursuing litigation of fraudulent conveyances and preferences.
“It’s the trustee’s understanding that this may be a Ponzi scheme.”
None of the lawyers connected with the case returned telephone calls for comment Monday.
The U.S. attorneys office is investigating, a spokesman said.
Also known as a pyramid scheme, a Ponzi scheme rewards early investors by paying usually exorbitant returns drawn from the money of those who buy in later.
When new money dries up, the pyramid collapses.
D.L. Ward was founded in 1982 by Donald Ward and his wife, Loletta. He died in 1993, when she took over as president.
Loletta Ward couldn’t be reached for comment.
D.L. Ward was what’s called a “factor,” a company that bought receivables from other companies at a discount. It made money as the receivables were paid off.
According to Richard Courteau of Gig Harbor, Wash., who invested $25,000 with the company just two months ago, each receivable was credited to the account of an investor who split the profit with the company.
A friend who invested seven years ago told him the company had consistently produced returns around 30 percent per year, he said.
Randy Querin of Vancouver, Wash., made three investments for a total $23,000, starting in 1989. Based on the financial statements investors received, he said, “The returns always looked fabulous.”
In January 1994, he began taking monthly draws of $350. Querin said there were no problems until about June of this year, when the checks did not arrive without his calling the company.
Loletta Ward, he said, “had such a sweet, grandmotherly voice. She was so reassuring.”
She attributed any delay to health or computer problems, he said.
The last check was dated Nov. 12.
Although he was repaid about $9,000, Querin estimates his loss at almost $50,000 based on the company statements and tax forms he filed with the Internal Revenue Service.