At the time he was accused by the state of defrauding three local seniors out of $96,000, Fran E. Austin, a former insurance salesman, lived in a half-million-dollar home with an entryway guarded by a locked wrought-iron gate. The brick house is in the upscale South Hill community of Quail Ridge next to Manito Golf Course and steps from panoramic views and a private tennis court.
Had Irene Minaker lived long enough to see the place, she likely would have thought it was decadent.
Instead, the frugal 86-year-old widow – who ate bargain-bin raisin bread instead of splurging on fresh goods – died largely unaware that Austin had squandered her $60,000 nest egg before listing her as an unsecured creditor and filing for bankruptcy, according to the woman’s family members.
Although he initially paid each of her three sons $1,000, calling it an interest payment on the investments she had made with him, Austin, of Spokane-based Austin & Associates, filed for personal bankruptcy protection last fall – effectively erasing his debt to Minaker and two other investors.
The Washington Department of Financial Institutions’ securities division recently issued an order requiring Austin to quit selling securities without a registration and giving notice of an impending securities violations fine of $30,000.
The order says that between March and August of 2004, Austin persuaded three elderly investors to give him a total of $96,000. He took $26,000 off the top for his personal use and lost the rest making options trades, the order says. Austin is accused of misrepresenting himself and the risky nature of the investments by promising his clients returns of 8.75 percent to 11.25 percent.
Austin talked Minaker into liquidating an annuity, incurring a $6,000-$7,000 penalty, according to the department. He then took her $60,000 check and skimmed $10,000 for himself before losing the rest on options trades, according to the documents.
“He took all of her money. How can he live that way?” asked Debra Minaker, a daughter-in-law who lives in Antioch, Calif.
The securities order lists similar stories for 82-year-old Gordon Westford, who is also deceased, and an 84-year-old former homemaker and waitress, who is still alive and asked not to be named. Both lost large sums of money through Austin & Associates.
Austin has yet to be served with the order because the process server for the state agency has been unable to breach the double gates at his last-known residence.
He didn’t respond to repeated requests for interviews left on his cell phone, his business answering service and through his bankruptcy attorney.
Minaker’s family took the last $3,000 of her estate and hired local attorney Jonathan Neill to file a lawsuit. Two years and another bankruptcy later, Debra Minaker wonders why Austin is still living the high life with no justice in sight.
The $30,000 securities fine doesn’t mean much to families of his alleged victims – people who lived modest lives and trusted Austin implicitly, Minaker said.
“To me it was a slap in the wrist,” she said.
Patrick Johnson, a deputy prosecuting attorney for Spokane County, said it’s tough to prosecute cases when the alleged victims are deceased. In back-to-back bankruptcy filings, one in 2005 and one in 2006, Fran Austin and his wife, Linda Austin, have sought protection from more than $1 million in debt, including $94,000 in credit card charges. The couple is heavily mortgaged, has few assets – although one listed asset is a 1998 Jaguar – and owes $52,000 in back taxes and other government debts, according to Bankruptcy Court records.
Additionally, property records obtained through First American Title and Escrow show that Austin and his wife recently transferred ownership of their $455,000 home in exchange for $10 to a man named Robert K. Nelson of Sandpoint.
Once known as Linda O’Connor, Linda Austin’s former husband, 53-year-old Spokane fire chief Al O’Connor, died in 1981 suddenly and under what at the time were deemed questionable circumstances.
The Austins’ most recent bankruptcy filing listed a combined monthly income of $8,274, including Al O’Connor’s firefighter’s pension, which generates about $38,000 a year for Linda Austin.
Although Austin has been licensed to sell insurance since 1969, the Washington state Office of the Insurance Commissioner recently revoked his license.
Bill Ripple, public affairs officer for OIC, said the agency didn’t have problems with Austin prior to the incidents cited by the Department of Financial Institutions.
The agency does initial background checks on people, Ripple said, but sometimes agents will use their insurance licenses to gain access to their client’s finances and trust.
Minaker and Westford, who passed away shortly after investing with Austin, had each purchased legitimate insurance products years ago through Rosenberry, Austin & Associates, a company with which Austin also was associated, according to the Department of Financial Institutions. The agency’s order also says the third victim also had investments through the former partnership.
Bruce Rosenberry died in 2003, but Austin still lists the business in the phone directory as Rosenberry, Austin & Associates.
Westford was living at Maplewood Gardens when Austin persuaded him to invest $5,000. At 82, the former chemical salesman wasn’t quite as sharp as he had been and he trusted Austin because he’d purchased a long-term care policy through Rosenberry, said his daughter, Marcia Janes.
Westford’s eyesight was failing and his family was aghast to learn that Austin had filled out the upper portion of their father’s personal check.
“It was just gross. It was a really disgusting thing,” said Janes, of Spokane.
In return for the $5,000, Austin left Westford a crudely typed document as a receipt. When their elderly father started talking about cashing in a $25,000 annuity and investing it with Austin, his children intervened.
“At this point I was looking over this very poorly written receipt and I said ‘Don’t invest anything more until we check this guy out,’ ” said Harvey Westford, Gordon Westford’s son.
Janes said Austin sent her father several checks for $200 before filing for bankruptcy.
Minaker’s family said Austin lost money that the woman spent a lifetime saving, as she and her husband raised three sons on paychecks he made working as a janitor at Sacajawea Junior High and Ferris High schools.
Irene Minaker lived alone in an apartment complex for low-income seniors and told her three sons, who live outside the area, that Austin was a nice man who gave her rides.
“Her courted her and courted her and talked her into this,” Debra Minaker said.
“She was married to the same man for all those years and another man comes and shows her some attention – that had never happened before.”
Martin Cordell, chief of enforcement for the Department of Financial Institution’s securities division, couldn’t comment on whether there are more victims or if his agency has contacted all of Rosenberry, Austin & Associates’ former clients, but said the investigation is still ongoing.
He cautions investors of all ages to beware of deals that seem too good to be true, especially when it comes to anyone guaranteeing higher than average returns from stock market investments. Anyone looking to invest might consider getting a second opinion, Cordell said.
“We’ve had many cases where people have invested through trusted advisors like insurance agents and have been scammed.”
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