EDDIE ALLEN

Ex-Military Brass Reject Allen's CIA Claim
JEAN O. PASCO

People who say they were defrauded by a Newport Beach businessman they say masqueraded as a war hero put three retired military officers, including two generals, on the stand Thursday to dispute claims that he flew secret missions for the CIA and was shot down in Laos.

The former officers, including Maj. Gen. Richard V. Secord and Brig. Gen. Harry C. Aderholt, systematically rebutted testimony by insurance executive  Edgar Dale Allen that his plane was downed during a top-secret Air Force-CIA mission in 1963 and that he was held prisoner.

Secord, who held a variety of Air Force posts in Southeast Asia from 1962 to 1968, called Allen's story "simply not credible."

There is no mention of the mission or Allen's captivity in his Air Force personnel file, nor was his name ever found among the thousands of names on official government POW lists. Allen, 69, contends the mission remains classified and has refused to speak in detail about it, claiming national security.

Several people who entrusted Allen with some of their life's savings have testified that Allen spun tales of war heroism, of attaining the rank of colonel (his file shows he retired as a captain), and of earning a Harvard law degree to entice them into giving him money he said would be invested in annuities.

About a dozen investors have claimed in court documents that they were defrauded by Allen and his American Life Underwriters. They are asking Judge Robert W. Alberts to deny a bankruptcy petition that Allen has filed and to order Allen to repay them.

Allen and his attorney, Theodor Albert, argue that the investors' funds were unsecured loans lost as a consequence of a failed business.   Allen filed for bankruptcy in 1997, listing about $2 million in secured and unsecured debts.

Allen said outside of court that Thursday's testimony was skewed. He said CIA and Air Force officials would testify later in the trial on his behalf. He declined to name them.

"We're going to have some very, very big people coming in," Allen said.

Alberts ordered Allen to testify at 9 a.m. today about his alleged military and CIA activities. After Allen protested that lives could be endangered by the testimony, the judge agreed to allow him to be questioned in the judge's chamber.

B.G. Burkett of Dallas, renowned for exposing fraudulent claims of veterans, coordinated the array of military might testifying Thursday. Burkett has testified twice previously in Allen's bankruptcy trial, which began a year ago.

Attorney William R. Kennon, representing investors Jon and Jolene Illingworth of Tustin and several others, said he hopes to prove that Allen concocted bogus stories as a device to commit fraud.

"There are a whole bunch of real patriots who have gone out of their way to come here today and testify about someone who they can't imagine is telling the truth," Kennon said. "There's nobody anywhere that has any information that supports [Allen]."

Among those casting doubt on Allen's claims was Aderholt, an Air Force officer in charge of CIA air operations in Southeast Asia from 1959 to 1962. He also created the military's Joint Personnel Recovery Center in Saigon in 1965, which eventually accounted for all military and CIA prisoners of war and those missing in action during the Vietnam War, he testified.

He said the list of downed fliers does not include Allen, an Air Force pilot. If Allen had been shot down as claimed, he would be on the list, Aderholt testified.

"No one who has claimed to be on the list and wasn't has ever validated [that claim]," Aderholt testified. "There would be a record of anyone who was taken prisoner and came back."

Secord, who headed tactical air operations in Laos from 1966 to 1968, said he was in charge of establishing the radar site in Laos where Allen claimed he was shot down.

In earlier testimony, Allen said that he was the "project officer" responsible for building the radar site in 1963. Secord said the radar wasn't installed until 1967 and that he'd never seen or heard of Allen.

Another witness, Ed Dearborn, was in charge of CIA flights through Air America in Laos in 1964, and similarly testified that he never heard of Allen or knew about any crash involving a CIA mission in 1963.

The final witness, retired Col. John Oberg, commanded the Hickam Air Force Base unit that Allen claimed to have been assigned to in 1963 when the alleged secret mission occurred. Oberg said Allen was not a member of the Hawaii-based unit, but may have assisted unit personnel with duties such as obtaining sleeping quarters and food for pilots who landed at Hickam.

Oberg also rejected Allen's claims that the unit flew top-secret U-2 spy missions over Laos. He said the unit had no aircraft of its own and participated in no secret operations.

The trial is scheduled to end next week. Allen has since opened a new company, Mega Agency Group, run out of the former offices of American Life Underwriters.

He is a financial genius who manages "assets in the billions" for wealthy investors; earned a law degree at Harvard University; played baseball for the New York Yankees; flew Air Force One for President John F. Kennedy; and, as a colonel in the Air Force, was injured and held as a POW in the 1960s after performing covert missions for the Central Intelligence Agency (CIA) in Southeast Asia. She is the high-profile vice chairperson of the Orange County Republican Central Committee, a public-relations officer for Southern California Edison, and a frequent television commentator who espouses Christian traditional values and conservative politics.

Together, Edgar Dale "Eddie" Allen, 70, and his wife, Jo Ellen, 55, appear the ultimate storybook Corona del Mar couple, living model lives in their $900,000 ocean-view Spy Glass Hill house.

But last month, federal bankruptcy Judge Robert W. Alberts shattered the impressive façade, ruling that Eddie had for years fabricated his life story in schemes to defraud wealthy and modest-income individuals of millions of dollars. The Allens had hoped that the court would give Eddie and his company, American Life Underwriters, bankruptcy protection to block the investors from ever collecting their missing money. But after reviewing more than two years’ worth of evidence, Alberts was unequivocal: Eddie had been "thoroughly discredited," in part by knowingly giving false testimony and presenting doctored evidence. The judge also accused Allen of continuing to hide several million dollars from creditors.

"At the outset of the trial, it was contended on Allen’s behalf that there was only a ‘kernel of truth’ in the plaintiff’s allegations. The court concludes that, quite to the contrary, the evidence before it indicates only kernels of truth in Allen’s contentions," Alberts wrote in his 86-page Sept. 6 ruling. "This court finds that Allen was not a colonel in the U.S. Air Force; he was not shot down, captured and held prisoner during the war in Southeast Asia; he is not a Harvard-educated attorney or, for that matter, an attorney at all; and he was not the very successful, wealthy and astute businessman portrayed. Plaintiffs justifiably relied upon such misrepresentations when investing. . . . [Allen] is liable for fraud and is not entitled to the economic fresh start afforded to honest debtors under the [bankruptcy] code."

William R. Kennon of the Tustin Lawyers represented the creditors, praised the ruling and described Allen as leading "a life of lies." Kennon says the creditors now have a judgment of more than $1 million against Eddie.

Jo Ellen did not join in Eddie’s bankruptcy petition, but she has been at his side throughout the past quarter century. Her various conservative political organizations have shared Newport Beach office space with Eddie’s business operations, irregularly paying rents of varying amounts. That same office became headquarters for the National Council of Business Advisors, a group Jo Ellen helped found in the mid-1980s—and at the head of which she placed Eddie. Eddie later advertised (in Who’s Who in Business and Finance) that he was appointed to the "prestigious presidential" panel by Ronald Reagan’s "v.p. [George] Bush." A primitive ledger from the couple’s office shows that money moved between Jo Ellen’s political organizations, Eddie’s office staff and the couple’s personal accounts. Creditors allege that Eddie used tens of thousands of dollars of their money to help fund Jo Ellen’s unsuccessful 1992 state Assembly campaign.

Nor are these accusations ancient history. On June 25, 2001, Mrs. Lee Pickett of Port Ludlow, Washington, asked the FBI to investigate the Allens. "Jo Ellen Allen is an accomplice to the façade by participating in recruitment dinners and social events with prospective victims," wrote Pickett, who gave Eddie $550,000 to invest for her. "Jo Ellen was present at a dinner I attended and gave a persuasive presentation about her husband’s business venture. She uses her well-connected Republican Party alliances to promote Eddie’s stature in the business community."

Pickett closed her letter by begging the FBI to intervene, saying Eddie’s "fraud" had driven her and her husband into financial hell. "I’m 79 years old and have been told to prepare to go blind," Pickett wrote. "My husband is handicapped with a debilitating disease, and we have been forced to declare bankruptcy to try and save our home. Mr. Allen has bled us financially and destroyed what is left of our lives." The bankruptcy judge cited Pickett’s courtroom testimony in his decision that Allen had defrauded his clients.

Allen, however, remains defiant. He told a reporter that the judge was "totally confused" and didn’t understand the insurance business. His latest attorney, Donald Segretti—a former Nixon administration staff member convicted of crimes associated with the Watergate scandal in the 1970s—told the Weekly he and Allen are preparing an appeal.

With eyebrow-raising charges of sexual infidelity as well as colorful courtroom appearances by high-ranking CIA agents, past presidential advisers and decorated Vietnam-era military officers—all of whom refuted Allen’s claims—it was Orange County’s most fascinating bankruptcy trial. But news of the case—and Alberts’ bombshell ruling—almost didn’t make it out of the Ronald Reagan Federal Courthouse in Santa Ana. The Orange County Register—whose editors and management often share the Allens’ politics and circulate in the same social and political circles—ignored the story altogether. The Los Angeles Times’ Jean Pasco, a longtime friend of Jo Ellen’s, sat on the story for nine days until Saturday—the least-read edition of the week. The Times also buried Pasco’s coverage on Page 3 of the local news section. Not surprisingly, Pasco’s version of events noticeably omitted evidence of Jo Ellen’s participation in what Alberts called Eddie’s "business machinations."

Jo Ellen Chatham was born in Indiana in 1946 on either Aug. 8 or Aug. 26; she has listed both dates on official documents. When she was a 21-year-old Los Angeles college student in 1968, a Malibu district judge married her to Ronald W. Thurber, a defense-industry budget analyst. They lived in a modest Granada Hills house, and she worked as an assistant professor at West Los Angeles College, teaching U.S. government classes and, for a short time, coordinating student campus activities. Thurber recently stated that his then-wife "wanted to be somebody," "wanted to be in politics her whole life," and was "snobbish."

The couple had been married less than eight years when Jo Ellen met the smooth-talking Eddie—already twice married and divorced—during a Little League baseball game in Northridge. Two months after her divorce of Thurber was final in May 1976, Jo Ellen and Eddie were married by a Baptist minister.

For the next decade, Jo Ellen built her conservative credentials. In 1983, notorious anti-feminist Phyllis Schlafly helped Jo Ellen launch a state chapter of Schlafly’s national organization, Eagle Forum, a right-wing advocacy group with close ties to the conservative fringe of the Republican Party.

Soon, Jo Ellen began appearing frequently as a political commentator on television and radio shows, including KNBC’s award-winning weekly Free for All. In her 1985 résumé, she listed occupations including "television artist" and "recognized authority on legislative, educational and family-related issues." Such local conservatives as Congressman Bob Dornan, Assemblyman Gil Ferguson and Supervisor Tom Riley showered praise on the woman with the quick wit, pretty blue eyes, shapely legs and an unmistakable bouffant hairstyle that was (and remains) straight out of a 1950s Betty Crocker cookbook.

In 1988, Jo Ellen tried to parlay her résumé into a public office, running under the "traditional family values" banner for the Newport Mesa Unified School District board. (Eddie was described in her campaign’s brochure as a "prominent Newport Beach businessman and financial adviser.") Her big policy points: teach only sexual abstinence in schools and let parents ban certain textbooks. She lost.

That same year, Jo Ellen earned her doctorate in political science from the University of Southern California; she began insisting that people call her "doctor." In 1991, Dr. Jo Ellen Allen’s byline appeared over political commentary about Republican social causes in the Newport Beach/Costa Mesa Daily Pilot. She appeared with political commentator Hugh Hewitt, Will Swaim (now editor of the OC Weekly), Pilot editor Bill Lobdell (now a Times religion writer) and UC Irvine political-science professor Mark Petracca on a feisty local cable debate show called The Lobdell Group.

Though Jo Ellen had obtained a measure of notoriety, she and Eddie struggled financially. In January 1992, they were evicted from their Newport Beach home for failing to pay $14,000 in rent. On Feb. 15 of that year, they moved rent-free into a lavish Santa Ana house owned by Newport Beach school official Stephen Wagner. Despite the financial challenges, three days later, Jo Ellen filed to run for the 69th state Assembly District. Within weeks, the Allens lost a car to repossession and—according to financial reports from that period—did not own any personal property.

Turning to her campaign, Jo Ellen immediately slammed sitting conservative Democratic Assemblyman Tom Umberg as not socially conservative enough and was "part of the problem of more government, more regulation." At the time, Allen was understandably mum about her close ties to Wagner, a married but closeted homosexual who was later arrested and convicted of embezzling almost $4 million from school-lunch programs during a six-year period. He died of AIDS in prison in 1995.

The Umberg-Allen campaign was bitter. Allen produced mailers depicting Umberg as Pinocchio alongside text that read, "This is the story of a little boy who grew up and couldn’t tell the truth." Umberg, a former federal prosecutor, responded with stinging questions about how the Allens earned their livings. One of his mailers stated, "[Jo Ellen], her husband and their family business [National Association for Employee Benefits] have been involved in dozens of legal battles together, including allegations of fraud, embezzlement and misappropriation of funds."

"Umberg has taken some lawsuits and led folks to believe things that aren’t true," a self-described "mad" Jo Ellen explained to the Register.

Little was made of the fact that Eddie’s company somehow poured $28,000 in "loans" into Jo Ellen’s campaign; $12,000 was never repaid and remains an issue in Eddie’s current bankruptcies. Umberg trounced his opponent at the November 1992 polls, and three months later, the defeated Allens moved back to Corona del Mar, where—thanks to the profits from one of Eddie’s most suspicious business moves—they were able to buy the Spy Glass Hill house.

While Jo Ellen was busy campaigning in 1992, Eddie launched American Life Underwriters and, according to his own testimony, began searching the country for wealthy individuals. He called them his "big accounts." Allen lured investors with his false résumé, promises of large annual returns and talk of his wife’s high-placed political connections, including Congressmen Dornan and Christopher Cox, U.S. Senator Paul Laxalt, and Orange County Assemblyman Curt Pringle.

In one case, Eddie hit pay dirt, collecting more than $500,000 from Doris Lach of West Palm Beach, Florida. According to court records, Lach thought Eddie—who claimed to be managing assets "in the billions"—was going to invest the money for her; he claims it was a loan. Later, when much of the principle plus dividends were due, Eddie said he couldn’t pay. One reason Eddie couldn’t pay, according to his own ledgers, was that he had used much of Lach’s money to purchase the Spy Glass Hill House, as well as to settle claims against him from previous clients.

In 1995, Mrs. Lach died and—in a stroke of luck for Eddie—one of her daughters, Lucinda Herdman, was named the estate’s representative. According to two sworn affidavits from Herdman’s relatives, Eddie and Herdman were "romantically and emotionally involved" for at least two years, and he contemplated divorcing Jo Ellen.

Eddie and Herdman have denied the allegation, but it is certain that Herdman secretly accepted a job as vice president of Eddie’s company for $125,000 and then, without consulting the estate’s other beneficiaries, signed with Eddie what they call a weak settlement agreement on behalf of her mother’s estate. During the bankruptcy trial, a tearful Eddie claimed he could prove he couldn’t possibly have had an affair: he carried a card in his wallet that declared him impotent. The bizarre assertion elicited no follow-up questions in court, but Herdman remains Eddie’s business associate and travel companion.

Jo Ellen—who failed to respond to more than a half-dozen requests for an interview—has apparently been suspicious of Herdman. The Republican-run Orange County district attorney’s office has refused to investigate Eddie’s businesses despite numerous complaints from bilked victims. However, they had no problem cooperating with Jo Ellen’s freelance investigation into Herdman. On Aug. 14, 1997, the DA’s office faxed to Jo Ellen a detailed law-enforcement report on Herdman. Chief Assistant DA Maurice Evans and Deputy DA Burl Estes wrote, "Pursuant to your request this morning, I had Irene in teletype run a warrant check on Ms. Herdman. The check was negative. Ms. Herdman has no warrants. As a backup check, I checked our office system with similar negative results. The teletype printout is attached."

Corporation and court records show that Eddie has established a succession of financial firms. The paper trail is so complicated and contradictory that Eddie himself was at pains to explain in court who owned the companies and how much money flowed through the accounts. Each time, he drafted investors with promises of huge returns and then declared bankruptcy or left the company entangled in a web of lawsuits. In the 1970s, he launched the National Association for Employee Benefits. He left the firm swamped in legal claims. He created American Life Underwriters in 1992 and filed for bankruptcy in 1997 following multiple lawsuits alleging fraud. At the same time he was attempting to steer American Life into bankruptcy, Eddie quietly launched Mega Agency Insurance Services and Mega Agency Group—the company to which the Picketts entrusted more than half a million dollars. Eddie told investors Mega would soon be worth $75 million; in 1999, it followed American Life into bankruptcy. In June 2001, yet another new investment firm, Metropolitan Financial Group, opened in Eddie’s office space with his old phone numbers, even as Judge Alberts tried to sort out the American Life and Mega bankruptcies.

Creditors have worked unsuccessfully to get at the one asset they know Eddie does have: the Allens’ Corona del Mar home. But before the 1997 bankruptcy declaration, Eddie gave Jo Ellen exclusive ownership of their home, frustrating his creditors again. Jo Ellen turned around and mortgaged the home three times, so encumbering it with loans that it is valueless to creditors. One of those who aided Jo Ellen and Eddie in those moves was none other than Dale Dykema, a key member of the elite Republican Lincoln Club.

By the time the Allens entered the Santa Ana courtroom, Eddie, who once advertised that he managed "assets in the billions" and was personally worth $150 million, claimed virtually no assets—some furniture, clothes, a leased car and a 10-year-old dog. He figured his monthly expenses at $11,866, including $1,000 for dinners at the Balboa Bay Club.

In the course of the bankruptcy trial just ended, American Life creditor Jon Illingworth of Tustin says Jo Ellen approached him with a question.

"She asked me, ‘Why are you so mean to my husband?’" Illingworth says, "I told her, ‘Because your husband’s a crook and steals other people’s money.’

"She’s got a lot of explaining to do."

Contact us via e-mail mailto:letters@ocweekly.com, regular mail (Letters to the Editor, OC Weekly, P.O. Box 10788, Costa Mesa, CA 92627) or fax (714-708-8410). Letters will be edited for clarity and length. By submission of a letter, you agree that we can publish and/or license the publication of it in print and electronically. All correspondence must include your home city and a daytime phone number.

ALLEN’S WRENCH

In the October 5-7 edition of the OC Weekly my husband and I were maliciously and intentionally vilified by Scott Moxley in an article characterized by lies, innuendos, misinformation and vicious accusations (Moxley’s "God Bless America! How a Newport Beach power couple used right-wing politics to build an empire worth absolutely nothing"). Since this is standard fare for the Weekly, I can only conclude that the serious personal anguish, embarrasment and pain this has caused is of no concern to the Weekly. In fact, I am quite sure they are rejoicing in their effort to malign yet another conservative Republican [1].

Unfortunately, neither truth nor accuracy are of concern to the Weekly. While it is true I did not respond to the e-mails sent to me by Mr. Moxley (since I was neither a party nor a witness in my husband’s bankruptcy case), my husband and his attorney left several messages with both Mr. Moxley and Will Swaim, the Weekly’s editor, indicating when he would be available to talk to the Weekly. Not surprisingly, the Weekly published its attack without speaking with Eddie.

I am not, and never have been, in any way involved in my husband’s business, to which all of his employees will agree [2]. During the early 1990’s, for a variety of reasons, including fraud committed against Eddie by businesses in Hawaii, Eddie has had financial and business difficulties, including being unable to pay back some of the loans made to his business. Finally, several years ago, he and his business were forced into bankruptcy. Plaintiffs in the case alleged he lied to them about his background in the military and in business. Recently, a judge ruled in their favor. Eddie is appealing the judgment.

Although the judge stated in his decision that Eddie does not have the rank of colonel in the Air Force, both the United States Air Force and Marine Corps list Eddie as a full colonel and continue to issue military documents and my own spousal identification card every four years with that designation [3]! The judge would not admit into the record such documentation from official military sources. Moreover, the only military records in evidence in Eddie’s court case were those obtained from normal retired military personnel records housed in St. Louis, Missouri. The judge did not permit Eddie to submit for the record notorized statements from the Air Force that a portion of Eddie’s military and medical records are in Washington D.C., under the jurisdiction of the executive branch of government where classified records are held. This notorized document also indicates Eddie’s rank as colonel.

During the trial, a CIA official testified that there had been no recent inquiries made regarding Eddie, as Eddie had testified, and that such inquiries would be known to him. When proof was submitted that a congressional inquiry had been made on Eddie’s behalf, the CIA official was dumbfounded and could not explain why he did not know of the inquiries. In addition, the official testifies that the CIA had run searches regarding Eddie both in 1964, within one month of Eddie’s mission in Southeast Asia, and again in 1967, after a second mission. The official could not explain why the searches had been conducted. There is much more to this complicated case, which is why it is on appeal.

However, the Weekly chose, deliberately and maliciously, to use my husband’s business difficulties to smear me and further damage Eddie’s reputation. The Weekly contends that "money moved between Jo Ellen’s political organizations, Eddie’s office staff and the couple’s personal accounts," deliberating creating a completely false impression of impropriety and possibly illegal behaviour [4]. The fact is, one room of the suite of offices in Eddie’s company was donated to a non-profit organization which I headed. On occasion, when I used a conference room or another vacant office for special projects, the non-profit organization paid for the use of those rooms. The non-profit also occasionally paid for the use of the copier or copy paper. These payments were not only perfectly appropriate, but involved very small sums of money.

Eddie’s company also made loans to my 1992 Assembly campaign. Those loans were legal, reported according to law, and substantially but not completely repaid. There is absolutely no impropriety whatsover.

The Weekly not only maligns me, but also falsely accuses reputable newspapers of not covering this "story" because, according to the Weekly, the Orange County Register’s "editors and management often share the Allens’ politics and circulate in the same social and political circles" and the Los Angeles Times’ Jean Pasco is "a longtime friend of Jo Ellen’s." The supposedly shared political views of The Register and me certainly did not inhibit The Register from fully covering the ugly 1992 Assembly campaign in which I was involved. Moreover, Jean Pasco and I are not, and have never been, friends and have no relationship whatsover.

I am confounded as to the Weekly’s assertion that I have listed two different dates for my birth. I was born once . . . on August 26, 1946 . . . and have never claimed any other date. If the Weekly has a document which indicates an August 8 date, I would certainly like to see it [5]. But I cannot, for the life of me, understand what the point is . . . except a feable attempt to bolster the Weekly’s attack on my integrity.

The Weekly also claims that I "helped found . . . the National Council of Business Advisors" in the mid-1980’s, "at the head of which she placed Eddie." I had nothing to do with founding that organization (although I would have been proud to!). The National Council was composed of CEOs of major corporations, including members of President Reagan’s kitchen cabinet. Eddie was asked by them to be its president. They advised the White House on various business issues. End of story. I am not sure what Moxley’s point is about the Council, but his facts are totally inaccurate [6].

In pursuit of their attempt to smear my character, Moxley and the Weekly note that my marriage to Eddie occurred only two months after my divorce from my first husband. The implication is obvious. The fact is, I had been separated from my first husband for more than a year when I met Eddie, who, until then, was merely a acquaintance at Little League games. It was yet another year before Eddie and I were married. Moxley’s innuendo concerning my moral character has created more pain than he will ever know. It is embarrasing to have to defend my honor publicly because of his vulgar insinuation [7].

The pettiness of the Weekly’s attack is beyond understanding. After earning my doctorate, Moxley claims I began "insisting that people call [me] doctor." I not only do not get the point of this absurd statement, but it, like so much else in Moxley’s mind, simply is untrue.

However, the remaining accusations and conclusions proffered by Moxley are not petty. They are vile and vicious. He asserts that I was "understandably mum" about my "close ties" with Steven Wagner, a "married but closeted homosexual who was later arrested and conviced of embezzling almost $4 million" from the Newport Mesa School District, and that Eddie and I moved "rent-free" into the Wagner’s Santa Ana home.

The facts: We moved to Santa Ana so that I could run for the Assembly. We had two weeks to find a home. Driving through Santa Ana we spotted a lovely home with a "for rent" sign in the yard. The home was vacant. The next door neighbors had a key, showed us the home, and gave to us the phone number of the owners, Mr. and Mrs. Steven Wagner. We had never met them before the day we agreed to rent their home [8]. They were not and have never been friends. They were landlords and we paid monthly rent [9]. Later that year, we, like the general public, learned about Steven Wagner’s embezzelment in the newspapers. Several months after I lost the election, we moved.

Moxley concludes that we purchased our current home "thanks to the profits from one of Eddie’s most suspicious business moves" and "he began searching the country for wealthy individuals. He called them his ‘big accounts.’" What this "suspicious business move" was Moxley does not mention. Nor does he note that when Eddie testifies about "big accounts," he was not talking about wealthy individuals, but large insurance agencies with which to do volume business.

Perhaps the most egregious and vulgar aspect to the Weekly’s attack are the allegations about my husband and his business associate, Lucinda Herdman. Lucinda and Eddie have worked together for a number of years, often traveling together on business, as Eddie had done with other employees. The Weekly claims I was suspicious of Lucinda and launched "a freelance investigation into Herdman" through the "Republican-run Orange County district attorney’s office." The inference and innuendos are obvious. Again, the facts: I did not do an "investigation." I made an inquiry on behalf of Lucinda, at her request, due to circumstances in a nasty child custody case with her former husband [10]. The circumstances regarding Lucinda’s personal matters are not Moxley’s or anyone else’s business. Of course, in keeping with the Weekly’s style of journalism which knows no bounds of privacy or decency, Moxley calls Eddie’s sexual impotency a "bizarre assertion" and then notes that Lucinda remains Eddie’s "business associate and travel companion." Again, the inference is obvious [11].

What Moxley does not mention is that Eddie’s health problems were sustained as the result of activities in the Air Force in late 1963 which caused him to be retired with 100% medical disability [12]. Using cortisone for nearly forty years to enable him to breathe freely have had other side effects, including the one mentioned so crassly by Mr. Moxley. Medical records, both military and civilian, verify Eddie’s medical conditions, although his opponents in court laughed and jeered at Eddie when he returned to court after having been hospitalized for emergency treatment to ease his breathing difficulty during the trial.

Moxley claims "it is certain that Herdman secretly accepted a job as vice president of Eddie’s company for $125,000." Lucinda’s employment was not a secret to anyone [13] and, contrary to what Moxley implies, Lucinda was working for Eddie long before her mother’s death. In fact, Lucinda’s mother assisted Lucinda in the office. Nor was Lucinda’s salary a "secret." Unlike most of us whose salary is not public information, Lucinda’s salary was, in fact, very public as part of the court record in the child custody case, which she won.

The Weekly has a reputation for cut and slash journalism. It also has a disregard for the truth and certainly an agenda of destruction. I have seen other friends castigated on its pages. I have occasionally been ridiculed. But it seems my husband’s business issues have provided the perfect opportunity for the Weekly to engage in a search and destroy mission . . . using weapons of of falsehoods, half-truths, innuendo and distortion. Like other victims of their yellow journalism, I find myself having to publicly defend and explain against lies and allegations based only on their own twisted and perverse motives. It hurts. It hurts deeply. But at least I know the truth and have confidence in that truth and my own integrity. That is more than Mr. Moxley, Will Swaim and their kind will ever have.

Jo Ellen Allen
Corona del Mar

Oct. 26 - Nov. 1, 2001 Orange County Weekly
Patriot Games 
How a Newport Beach businessman used 'granny, apple pie and the flag' to bilk patriotic investors
by R. Scott Moxley

Orange County businessman Edgar Dale "Eddie" Allen tells many exciting  stories of his wartime heroism, but the best one goes like this: it's late 1963, and the U.S. military is gearing up for a major land war in Asia. Air Force Captain Eddie Allen, on loan to the Central Intelligence Agency (CIA), is flying a U-2 spy plane over the jungles of Laos with a crew of three. Their mission: to find the spot that will serve as a key radar beacon for the future bombing of Hanoi. Then disaster strikes. The plane is shot down; only Eddie 
(who suffered severe smoke inhalation) and one other crewman survive the fiery crash. While fleeing Viet Cong guerrillas, Eddie runs through a river and cuts his foot on a piece of coral. Unable to continue, he is captured, marched to a POW camp and tortured mercilessly for months. He is kept in a tiger cage partially submerged in water; he fends off rats; withstands bamboo shoved under his fingernails; and offers nothing but his name, rank and serial number in relentless interrogations. But Eddie has friends in high places: Henry Kissinger enters into secret talks with the Viet Cong, who agree to release Eddie in exchange for $100,000 in gold bullion. A CIA helicopter arrives at the camp and ferries Eddie-every bone broken-back to Bangkok and then to Hawaii, where he is rewarded for his service with a secret promotion to the rank of colonel.

Careful readers will note several problems with Eddie's story, however. The U-2 carried just one crew member. According to the CIA, it was never used over Southeast Asia. There is no coral in landlocked Laos.Noting these contradictions and others, a federal bankruptcy judge last month concluded that Allen, 70, used that story and similar tales of patriotism, faith and financial genius to sucker millions of dollars from unsuspecting elderly investors. After listening to evidence for more than two years, Judge Robert W. Alberts rendered an unambiguous opinion on Sept. 6. He called Allen's testimony and résumé nothing more than a "pattern of lies and distortions" and his business 
practices "fraudulent modus operandi" that used "misrepresentations" to entice and "defraud" investors. Those investors now have a multimillion-dollar judgment against Allen.

Surprisingly, the judge's conclusion was in doubt through much of the trial. When the trial began in 1999, Allen insisted he had not fabricated his 
military résumé. The two sides battled to a stalemate, with the creditors' attorney, William R. Kennon, slowly picking at Eddie's inconsistencies, and Eddie asserting that only the CIA could exonerate him."I have a lot of proof," he told the judge, proof he couldn't reveal: the CIA had ordered him not to speak about his mission because of national security. It was a terrible Catch-22, Allen complained. More than the law, there was personal loyalty involved, Eddie suggested; he couldn't defend his claims in public because "some people [involved in the 36-year-old mission] could get killed."

And then Eddie suffered a jurisprudential nightmare. Midway through the trial, three former highly decorated military and CIA operatives showed up in court. Each had overseen or participated in precisely the mission in which Eddie claimed a role:

.Air Force Brigadier General Harry C. Aderholt, a colorful CIA officer and Air Force fighter pilot who served in World War II, Korea and Vietnam and as a legendary commander of special air operations in Southeast Asia. Aderholt on Eddie: "If he did what he claims, I would have known about it. I told the judge that Allen was a lying son of a bitch who has no conscience. He should be court-martialed.".Air Force Major General and CIA officer Richard  Secord, who served under Aderholt during the Vietnam War and was instrumental in establishing Laotian-based radar sites for American bombers. Secord on Eddie: "His testimony is false on its face."

Ed Dearborn, a decorated Korean War Marine who became a celebrated covert-operations pilot in the 1960s for the CIA-front airline Air America in Southeast Asia. 

Dearborn on Eddie: "Eddie's just a pathetic guy who is not satisfied with himself, so he invented a war record to steal money from elderly people. It's all I can do to keep my hands off his neck."

If Allen was shaken, he didn't show it. He dismissed the trio as dishonest blowhards who were not privy to his top-secret assignment."My mission was concocted by the CIA," he insisted under oath. "I think I served my country."

But in what was perhaps the most dramatic, revealing moment in the trial, the CIA made an unprecedented move. Two top-ranking officials from the agency's Langley, Virginia, headquarters showed up unannounced in court. They told the judge they were willing to reveal what they knew of Eddie's espionage record.Eddie gasped, looked nauseated and then angrily slammed his fist on the defense table. His attorney, Jeanne Rowzee, meekly complained there was "no reason" for the CIA to testify.

"We are very reluctant to have these witnesses," said Rowzee. "It would be inappropriate. . . . They are trying to sabotage our case."However, CIA general counsel Daniel Pines told the judge that they wanted to testify "not for any side," but on their own behalf to "set the matter straight." 

Judge Alberts noted that Eddie had insisted for two years that he had made every effort to procure the agency's testimony. Now, here they were. The judge allowed the testimony of William H. McNair, a top veteran CIA operations official and one of only two staff officers in the world with top-secret access to all agency files.McNair's testimony was simple: he guaranteed that Allen had never worked for the CIA in any capacity. Other revelations from the trial included:

.In Eddie's ever-evolving story, he claimed to have been in captivity during mid-December 1963. But a personnel record proved Eddie had visited a doctor for a routine appointment in Honolulu on Dec. 16.

.In a terse letter to an independent investigator, Kissinger dismissed Eddie's ransom story. "I was not in government at the time and have no knowledge of  such an event," the former secretary of state wrote.

.Eddie's military records show that, far from being a covert agent, he primarily performed clerical and custodial tasks, such as cleaning a base swimming  pool, coaching a military baseball team, and making sure actual combat pilots had clean sheets and towels when they stopped over at Hickam Air Force Base in Honolulu.

.Eddie tried to submit what appeared to be a partially redacted travel order to prove he went on the CIA mission. But the original copy of the document was  located in the military's St. Louis record depot. It was not redacted-and for obvious reasons: the travel order showed Eddie had been sent, not to Vietnam or Laos to spy, but to South Korea to help coach a baseball clinic.

.Air Force General John Oberg, Eddie's commanding officer during the time of the alleged mission, almost laughed when asked if the CIA had borrowed Eddie for a top-secret mission. When Eddie's attorney suggested that he had participated in the top-secret U-2 program because the planes occasionally landed at Hickam, Oberg pointed out that would make a gas-station attendant a secret agent if he filled up a CIA agent's car.

.Eddie's stepdaughter Tamara Leslie testified that Eddie often claimed to family members that the scar on his left thumb was the result of torture by the Viet Cong, but a detailed 1959 military record shows Eddie's left thumb was scarred during a desk assignment half a decade before the Vietnam War.

.Eddie claimed his health was perfect until he suffered smoke inhalation in the crash of the U-2 (other times, it was a transport plane or a helicopter), but more than a dozen personnel records show Eddie chronically complained about his breathing for several years before his alleged CIA duty.

.The judge ordered all parties to avoid contact with Aderholt when court was out of session unless both attorneys could be present. But the general says  Eddie's wife, Jo Ellen Allen, called him twice at his Santa Ana Radisson hotel room in hopes of arranging a secret meeting before he testified further..Eddie refused to name the spies who assisted him on his mission except in closed session. But the people he ultimately named are all listed in the index of The  Ravens, a 13-year-old book written by Christopher Robbins. Hilariously, Eddie confidently named Douglas Blaufarb as one of his pre-mission 1963 CIA contacts in Laos, information that was in Robbins' book erroneously; Blaufarb was actually in Laos the following year.

In retrospect, Eddie's story of life as a master spy may seem far-fetched. But in scamming investors with his stories of battlefield glory, Eddie had assembled  a number of compelling props. Tall and stately, charismatic and apparently pious (he told people he was a devout Catholic who never smoked or drank),  Eddie had a Newport Beach business address, claimed offices in 10 cities in the U.S. and more than $50 billion ("that's $50 billion with a B," Allen liked to  say) in offshore assets. He said he owned the "highest-volume" independent insurance agency in the nation, served as general counsel to a major Manhattan corporation, fathered two sons who played major-league baseball, hobnobbed with powerful Republican politicians, financially advised O.J. Simpson and Tommy Lasorda, and was himself "just short" of making the Forbes magazine list of richest Americans. But most of all, Eddie had his wife, Jo Ellen. Fifteen years his junior, she is an Orange County Republican Party official, Southern California Edison spokeswoman, and onetime conservative commentator on CNN. Jo Ellen once headed the local chapter of a well-known anti-feminist political group and was a high-ranking Reagan/Bush campaign official in California. Creditors and former business associates say Jo Ellen was a frequent participant in Eddie's sales pitches. 

They say she occasionally attended sales meetings, vouched for Eddie's résumé, soothed frustrated creditors, and used her political connections to bring new clients to her husband. Eddie's résumé-and the Allens' convincing sales pitch-persuaded countless investors."Most of the men who heard Eddie give his sales spiel basically saw a feeble older man who had honorably served his country as a fighter pilot and was tortured as a POW for a year in Vietnam," said Gerry Nowotny, a former business associate of Eddie's. "You could see they were wondering to themselves if they would have been man enough like Eddie to survive it. But he used smoke and mirrors to obtain trust. He took advantage of our society's values. He wrapped himself in granny, apple pie and the flag." During the bankruptcy trial, held in the Ronald Reagan  Federal Building in Santa Ana, Nowotny testified that on 50 or 60 occasions, he observed Allen make his "standard sales pitch." A key theme in the pitch was patriotism, and it always included dramatic accounts of his top-secret Southeast Asia mission and how, when he finally returned to California, the first of his three wives, Julie, said she "didn't love him anymore." It was the saccharine fiction of a 1950s Audie Murphy war movie, but it worked. Minds were distracted, hearts were touched, Eddie was trusted, and-while Jo Ellen boldly lectured the nation on morality-other people's life savings funded the couple's luxurious Corona del Mar lifestyle.Nowotny says he will never forget his first meeting with Eddie Allen-at the Fort Lauderdale Westin Hotel  in November 1992. Allen wanted Nowotny, an insurance agent who worked for Cigna in Boca Raton, to help sell Allen's image as a war hero and financial genius to prospective investment clients in Florida. Though his own credentials were impressive (graduate of the U.S. Military Academy at West Point and the University of Miami law school, in addition to a five-year stint in the Army), Nowotny couldn't help admiring Allen. Thirty years older than Nowotny, Allen narrated his autobiography with an intoxicating mix of worldly  wisdom, religious piousness and grandfatherly charm."My background is as a graduate of West Point, and when somebody says something-particularly someone who is a retired Air Force colonel, supposedly-to me, that's a person of high integrity," said Nowotny. "And if that person says the sky is black, then I am going to believe the sky is black. I had no reason to doubt him at the time. . . . He was very charismatic. I just didn't know he was lying."

Perhaps nobody can spot a liar better than B.G. "Jug" Burkett, a Dallas stockbroker and honest-to-God decorated Army first lieutenant and combat veteran. Burkett-who witnessed the terrible casualties of war-has made it his mission to find and expose military impostors, particularly those claiming to have served in Vietnam. "What those people do is nothing but a disgrace to the 58,000 men who died in Vietnam," said Burkett.In the past 15 years, he has reviewed the war claims of more than 2,000 people and found that 75 percent involved deceit. Network shows such as ABC's 20/20 have featured Burkett's investigations. In 1998, he co-authored Stolen Valor: How the Vietnam Generation Was Robbed of Its Heroes and Its History. The book documents such noteworthy cases of military identity theft as actor Brian Dennehy's; in his personal life, Dennehy posed as a once-wounded Vietnam combat veteran. Burkett used military records to prove that Dennehy had been stationed in Okinawa, not Vietnam. Faced with the evidence, the actor confessed and apologized. "Usually, a guy will invent a story just to try to get respect or to get someone to buy him a beer," said  Burkett, who studied Allen's claims and testified  against him as a court-approved military-records expert. "Other times, a guy will pose as a Vietnam  veteran to try to explain away a crime he has  committed. "Of all the people I've nailed, Allen has to be the  biggest pathological liar I've ever seen," Burkett  told the Weekly. "He is a master of taking nothing and  making it look like something. He also has the innate  ability not to flinch when he's caught in a lie. I  watched him stare at legendary covert-operation  generals who testified against him as if they were leaves in the wind, and he acted as if they didn't  understand what an important hero he is. The guy is  unbelievable."

In a recent telephone interview following the Weekly's  first story on the Allens ("God Bless America: How a  Newport Beach power couple used right-wing politics to  build an empire worth absolutely nothing," Oct. 5),  Allen fluctuated between affable and angry. He offered  no apology for the gut-wrenching financial disasters  he has caused numerous families across the country. In  fact, he said, he and his wife are the real victims.  He blamed Judge Alberts for unfairly "hurting my integrity." Three times he asked if he could talk to me "man to man." "I am going to tell you something candid," said Allen.  "I have something with United States Air Force  letterhead that will prove my case. The judge refused  to let it into evidence, but it shows that-contrary to what Judge Alberts thinks-I am a full-bird colonel. It also shows that I was shot down on a mission." That document-obtained by Allen's creditors during the  trial-originated at Honolulu's Hickam Air Force Base,  where Allen was stationed during peacetime in the early 1960s. There is no mention of a secret mission or capture. However, it does list Allen as an Air Force colonel-a rank he nowadays claims the CIA secretly bestowed on him as a reward for his dangerous espionage work in Southeast Asia. But Air Force officials at Hickam told the Weekly the document is meaningless. They explained that in early 2001, Allen called a Hickam hospital outpatient-records sergeant; represented himself as a colonel; and told the sergeant to list him as a colonel on a computerized benefits form and to print, notarize and mail Eddie a copy of that screen. "The sergeant remembers that [eight-month-old] call because it was so unusual," said Major Stephen  Clutter, a Hickam public-affairs officer. Nonetheless, Allen insists that newly generated  document is more consequential than dozens of Allen's  official military-personnel records going back almost  40 years-including several containing his  signature-that show Allen never exceeded the rank of 
captain. The Weekly has also reviewed a transcript of  Allen's 1964 military-discharge hearing. During the  proceeding, Allen was addressed as and answered to  "Captain."

The Allens continue to assert their stories are true.  But since the trial ended last month, they have  altered one more detail. Eddie and Jo Ellen now claim that the mission was so secret that even the CIA  didn't know about it. "I can tell you now that my records are locked away at  the White House," said Eddie. Aderholt, who is the subject of the recent  military-espionage book Air Commando One, laughed at  the Allens' latest claim. "I have met both Eddie and Jo Ellen Allen," Aderholt  said, "and I can tell you, sir, that I consider both of them nothing but phonies."

==================================

But the usually indefatigable Illingworth is exasperated these days. Despite a string of victories-the judge's stinging decision enumerating Allen's "fraudulent modus operandi," occasional media coverage, and the support of real CIA agents and military heroes-he is no closer to collecting the $40,000 he says was "conned" from his family in 1993.

Worse, Illingworth and other victims of Allen's deceptions note, no law-enforcement agency has moved against Allen. Illingworth thinks he knows why, and it has to do with something Allen told him five years ago: it's politics.

On Dec. 6, 1996, Illingworth, a mild-mannered, former picture-frame manufacturer, visited Allen's office near John Wayne Airport. He told Allen that he had discovered the businessman's sordid history and demanded money then 16 months overdue. Allen-who portrayed himself as worth more than $350 million even though federal records show his annual income was less than $18,000-stood in his trademark gray slacks and double-breasted, blue blazer and responded with what Illingworth calls "his usual, irrelevant small talk."

"He always had excuses for not paying the money back, and he loved to tell long stories about what an important person he is," said Illingworth, a 59-year-old retired Tustin resident. "But I didn't want to hear any of it that day because I finally knew he was a liar and a thief. I told him I wanted him to pay me my money then or I would contact the police and file a lawsuit."

The threat annoyed Allen, who-according to a 1997 complaint Illingworth filed with the FBI-ended the confrontation with a claim that still haunts Illingworth. The businessmen bragged that he is immune from prosecution in conservative Orange County, where he and his wife, Jo Ellen-vice chairwoman of the powerful county Republican Party, an occasional television commentator and spokeswoman for the politically potent energy giant SoCal Edison-are on a first-name basis with fellow GOP prosecutors, judges and congressmen.

According to Illingworth, Allen calmly said, "The law can't touch me, and if it will make you feel any better, go ahead and sue me. Then you will really see how influential and powerful I really am. "For five years, more than 16 individuals including Illingworth have urged authorities to investigate and prosecute Allen for crimes ranging from fraud to impersonating an attorney to income evasion. Their complaints have come to nothing.

One of those who has repeatedly complained has been Gerald Nowotny, a West Point Military Academy graduate and military veteran who worked with Allen in the mid-1990s until he uncovered suspicious activities. He wrote his first letter to the cops in July 1997. 

Nowotny nowadays has one question for Orange County law enforcement: "What does it take for you guys to open criminal investigations?"

"I would like to bring a serious crime to your attention involving fraudulent conversion of over $3 million of investors' funds in several different state jurisdictions," Nowotny wrote in July 1997 to the FBI's Santa Ana bureau, the Orange County district attorney and the Newport Beach Police Department. 

"Eddie Allen has heavily relied upon the credibility and assistance of his wife-Jo Ellen Allen of the Orange County Republican Party and a [Governor Pete Wilson-appointed] member of the California Bar Association board of governors-to create the aura of credibility necessary to gain the trust and confidence of investors. We have significant documentation that demonstrates that Eddie has operated a Ponzi scheme."

A Ponzi scheme is one in which the con man brings in new investors to pay off old ones, living off whatever he can keep for himself. Nowotny's "documentation" was apparently powerful enough for the slow-moving bureaucrats at the Securities and Exchange Commission in Washington, D.C.; they revoked Allen's securities license in 1996. But no law-enforcement officers in Orange County investigated the charges. Based on extensive interviews with Allen's victims, the Weekly has learned that the FBI told people to contact the district attorney; the district attorney's office pointed to the Newport Beach Police Department; and Newport Beach detectives have done nothing.

"I would like to think that in a country as great as ours, decent, innocent Americans are entitled to justice," said Nowotny. "I wish I didn't have to say this, but the law enforcement has been worthless in this case. Eddie Allen has been able to operate in Newport Beach with immunity for some reason I just don't understand."

Local FBI officials and the district attorney's office-which, records show, has on at least one occasion given Jo Ellen special, behind-the-scenes access to secret criminal databases-declined to comment on their lack of interest in pursuing Eddie Allen, who still conducts business in an executive office park near John Wayne Airport.

But Newport Beach police Sergeant Steve Schulman, the department's public-relations officer, said his detectives are aware of the allegations and acknowledged people may have lost large sums of money to Allen. But, according to Schulman, "the hard part" is proving Allen "intended to steal" the funds. When asked how police could determine the difficulty of a case before opening an investigation, Schulman responded defensively.

"We've decided to re-evaluate the case," he said. 

"Check back in a couple of weeks."

The Allens' victims say they've heard that before and believe police are bluffing in an effort to save face. In the 51 months since they filed detailed complaints, Newport Beach detectives have poured manpower and resources into prosecuting cases involving fewer victims, far less money and politically powerless suspects. A few of those cases include:

.$14,000 theft from a local youth soccer fund.

.allegations that a burglary victim exaggerated losses.

.a $65,000 embezzlement at a retail shop.

.a counterfeit Paul Mitchell shampoo-bottling operation.

.a minor who used the Internet to steal credit-card numbers.

.a telemarketing scheme that targeted elderly locals for a total of $40,000.

.a $700-per-month illegal housing-rental scam.

.a lengthy probe into city parking-meter thefts-a felony police say they will aggressively pursue.

.a three-detective-sting at a Fashion Island steakhouse where two parking valets allegedly stole eight Mobil gas Speed Passes. Illingworth says police inaction on the Allen case has made "a mockery" of justice in Orange County.

"Somebody has stolen more than $1 million. You'd think the Newport Beach police would he interested. They're 
not. They don't even return telephone calls about Eddie," he said. "If they had done something when we first told them about his scam operation, they could have prevented what happened to Mrs. Pickett."

More than two months after the police were first informed about Allen's business practices, he took $553,000 from Lee Pickett, an 81-year-old who-because Allen has never repaid her one penny-was forced into bankruptcy to save her house from foreclosure.

"What will it take to bring this guy to justice before he destroys any more innocent people?" Illingworth asks.

Schulman says not to worry.

"We're on the victims' side," he said. "Believe me, it is usually us who want to put the bad guys in jail."

Vol. 7 No. 14 December 7 - 13, 2001
Home Run
Eddie and Jo Ellen Allen have their very own housing crisis

by R. Scott Moxley

http://www.ocweekly.com/ink/02/14/news-moxley.php

In the three months since a federal bankruptcy judge ruled that her husband used patriotism, religion and political connections to defraud elderly Republicans out of millions of dollars, Jo Ellen Allen’s life appears unchanged. Several investors testified that Jo Ellen vouched for Eddie’s honesty and his phony military and business credentials. But the Southern California Edison spokesperson and Republican Party official continues to attend political functions, where she fires up God-and-country conservatives. And she still shows up a few times a month at KOCE, where she offers news commentary on the Huntington Beach public TV station. You’d know her: she emerges from a Lincoln Town Car wearing a 1950s-style shampoo-set hairdo and an expensive knit suit. Her sparkling blue eyes are outmatched only by the American-flag lapel pin she invariably wears.

"I think Jo Ellen is in denial. She acts as if she’s done nothing wrong," says Jon Illingworth, a 59-year-old retired Tustin resident who Eddie defrauded for $40,000. "Far from apologizing and trying to make amends, the Allens claim they are the victims. They’ve never taken any responsibility for all the people they have hurt."

But if Jo Ellen’s public life is toothy smiles and Fallwellian political pronouncements, her private life is a Gothic nightmare. On Nov. 9, Washington Mutual Bank foreclosed on her $1 million home at 21 Carmel Bay in Corona del Mar, driving the Allens onto the street. According to court records, Jo Ellen stopped paying their mortgage, community-association dues and property taxes almost a year ago. At the same time, the Allens were in a nasty legal fight with the lawyer who was supposed to represent Eddie in his appeal of the bankruptcy judge’s Sept. 6 decision.

The Allens’ housing crisis dates back 10 years. In February 1992, they fled another Corona del Mar home, still owing their landlord $14,000 in rent. They settled in a posh Santa Ana mansion so that Jo Ellen could run for a state Assembly post there. Though there’s no evidence they paid rent, that home has its own remarkable history: the Allens’ landlord was Stephen Wagner, a Newport-Mesa school official arrested that same year on charges he bilked the district out of $4 million. He pleaded guilty, was convicted and died of AIDS in prison in 1995.

Jo Ellen lost the Assembly race and, in a move that suggests her relocation to Santa Ana was purely political, began the hunt for a new home—in the very Corona del Mar neighborhood the Allens had abandoned the year before. In 1993, she and Eddie settled on 21 Carmel Bay, a three-bedroom ranch-style house on a hill overlooking Newport Harbor and the Pacific. Its 1993 purchase price: $695,000. Money wasn’t hard to come by: court records show that Eddie had just conned more than $580,000 out of Doris Lach, an elderly Florida woman. Nevertheless, the Allens persuaded William Thrash, the former owner, to finance their purchase.

Early on, the couple missed several house payments to Thrash. A retired four-star Marine Corps general, Thrash now lives in Hilton Head, South Carolina. And though his troubles with the Allens occurred almost a decade ago, he recalls them vividly. Three years after they bought the house, the couple began having trouble paying the mortgage. Thrash was forced to threaten foreclosure several times in 1996 before the Allens cobbled together a collection of loans from banks and friends to pay him off. "The worst day of my life was the day I met Eddie Allen," Thrash says.

Their troubles with Thrash would suggest a cash-flow problem in the Allen household. But court documents show the couple lived a lavish lifestyle, shopped at expensive Newport Beach boutiques, drove luxury cars and took frequent "business" trips. They dined often at the Balboa Bay Club, which Eddie once told a business associate he partially owned. He doesn’t. Eddie’s autobiographical stretchers didn’t stop there: several investors say Eddie got their confidence—and their money—by deceitfully posing as an affluent Harvard-educated attorney, Wall Street financial genius, and key CIA spy who advised Republican presidents and had been tortured while a prisoner of war in Vietnam.

Eddie’s cons produced a swelling—and litigious—army of enraged creditors. Surrounded on all sides, Eddie moved quickly to shelter the only asset he would admit to owning—the home at 21 Carmel Bay. To keep the house beyond the reach of his creditors, Eddie surrendered full title to Jo Ellen in February 1996; she immediately wrapped the house in a cumbersome series of mortgages that drained it of all equity. One year later, Eddie declared personal and corporate bankruptcies.

The Allens don’t just have trouble with houses; they also have trouble with lawyers—especially, perhaps, their own.

A centerpiece of Eddie’s bankruptcy trial was Eddie’s claim that he had been a valuable Vietnam-era CIA agent. Eddie told prospective investors he had been captured by the Viet Cong, tortured and rescued thanks only to the personal intervention of Henry Kissinger or Major General Richard Secord, depending on which version Eddie told.

But when the issue came up at trial, Allen clammed up. He said he couldn’t bring any supporting witnesses to his own defense, that describing his 1963 mission in Vietnam would, 37 years later, endanger other agents. For more than two years, Allen and his attorney, Ted Albert, had asserted they would offer irrefutable proof of the military heroism. It never came. Instead, in early 2000, creditors attorney William Kennon brought to trial a string of top-ranking CIA and military officials and agents. Each participated in the missions Eddie claimed were his; each denounced Eddie in unvarnished terms. "If he [Eddie] did what he claims, I would have known about it," says Air Force Brigadier General Harry C. Aderholt, a colorful CIA officer and fighter pilot who served in World War II, Korea and Vietnam. "I told the judge that Allen was a lying son of a bitch who has no conscience. He should be court-martialed."

Eddie insisted Aderholt and the others were lying. He told federal judge Robert Alberts he could name men who would verify his participation in top-secret Vietnam missions but only in a session closed to the public. A tape of that April 2000 session since unsealed reveals that Allen’s allegedly top-secret names were widely available in books one can find on the shelves of any Barnes & Noble.

Immediately after that disastrous session, citing a disagreement with his client, Allen’s attorney dropped the case.

Allen then turned to Irvine attorney Jeanne M. Rowzee. She may be a very good lawyer; it’s clear Rowzee is a smart businesswoman. Court documents in the matter of Allen vs. Rowzee show that attorney and client worked out a deal to fund Rowzee’s work in the bankruptcy case—a deal involving the house at 21 Carmel Bay.

Eddie found M&G Property Management, a Bellflower firm willing to float Jo Ellen a $100,000 loan for litigation. In exchange, the Allens would offer as collateral Jo Ellen’s house. It’s hard to imagine why M&G would gamble on a couple with the Allens’ record of bad debt, bankruptcy and stiffed landlords or why it would accept as collateral a home already entangled in loans to myriad other lenders, including Southern California Edison Credit Union and Washington Mutual Bank. Several phone calls to M&G went unanswered.

But this much is clear: on Oct. 24, 2000, Jo Ellen executed a note for $100,000 secured by the home at 21 Carmel Bay. Following an agreement drafted and signed by Eddie, M&G’s cash went directly to Rowzee; following that same agreement, Rowzee cut Jo Ellen a check for $25,000 with the understanding that those funds were reserved for litigation.

For the last two months of 2000, the sun smiled upon the Rowzee-Allen-M&G relationship. Eddie sent his $1,000 December payment to M&G with a note: "Thank you for your help."

But in January, court documents show, the relationship soured. Eddie and Jo Ellen stopped paying M&G, and Eddie introduced a new interpretation of his financial arrangements with Rowzee. In a Jan. 26, 2001, memo to the lawyer, Eddie wrote that Rowzee should deposit $75,000 in unspent funds from the M&G loan to "our bank account and [allow the Allens to] pay you as required."

That same day, Rowzee fired back in a manner that shows she understood Eddie Allen too well. "For reasons that are too numerous to go into here, the funds for your legal representation should NOT at any time be in your bank account," Rowzee wrote. "Moreover, I am requesting at this time an accounting of the $25,000 transferred to you that was earmarked for expenses in this case: from my perspective, I fear that funds have long ago been spent on expenses unrelated to this case. For instance, the trip to Thailand that you claimed so desperately to need."

Their harsh January 2001 exchange set the tone for the Allen-Rowzee relationship. A month later, the trial phase of Eddie’s bankruptcy case wrapped up. Seven months after that, on Sept. 6, the judge issued his stinging rebuke: "This court finds that Allen was not a colonel in the U.S. Air Force; he was not shot down, captured and held prisoner during the war in Southeast Asia; he is not a Harvard-educated attorney or, for that matter, an attorney at all; and he was not the very successful, wealthy and astute businessman portrayed. Plaintiffs justifiably relied upon such misrepresentations when investing."

Because of his fraudulent presentations, the judge said, Eddie was "not entitled to the economic fresh start afforded to honest debtors under the [bankruptcy] code." Eddie owed creditors $1.5 million in that case alone. Two additional Eddie Allen corporate bankruptcies are being litigated now.

Sept. 6 was a dark day for Eddie and Jo Ellen. On the day the judge issued his blistering conclusion, the Newport Beach-Costa Mesa Daily Pilot ran a legal advertisement in which M&G fulfilled its legal obligation to give the Allens more bad news: "YOU ARE IN DEFAULT UNDER A DEED OF TRUST. . . . UNLESS YOU TAKE ACTION TO PROTECT YOUR PROPERTY, IT MAY BE SOLD AT A PUBLIC SALE." Three weeks later, M&G pushed the house at 21 Carmel Bay into a foreclosure sale. A day after that, on Sept. 28, M&G won the deed to the house.

The situation was grim. But the Allens fought a guerrilla war worthy of the Viet Cong who Eddie claimed tormented him. In that war, they had powerful allies, including Newport Beach attorney Donald Segretti. A convicted co-conspirator in the Watergate trials, Segretti helped the Allens file a request for a temporary injunction against M&G. Though a judge refused the motion, the September filings make for remarkable reading. Eddie continues to lean on his age (he’s 70) and still plays the bogus Vietnam-combat card. Jo Ellen’s complaints are more interesting. Declaring herself "shocked," she asserted without irony that she and her husband had fallen into the hands of "another unscrupulous lawyer." Looking forward to a long legal battle with M&G and her husband’s attorney, Jo Ellen claimed "the emotional and financial harm that we will suffer if we are forced out of our home will be inconceivable."

On Oct. 5, almost a year after making their last mortgage, tax and homeowners-association payments, Eddie and Jo Ellen were still in the home. On the front door, M&G had posted a "Three Day Notice to Quit," giving the Allens 72 hours to pack their things and leave. Process servers turned up at 21 Carmel Bay again and again—between 6:30 a.m. and 6 p.m. on several different days. They reported that the Allens were inside the home but refused to come to the door. They eventually served Segretti.

Three weeks later, M&G doggedly filed suit against the Allens; a day later, Segretti filed a cross complaint against M&G and Rowzee, alleging they defrauded the Allens.

Then the ax fell. It was one thing to fight a paper battle with a mom-and-pop lender; but on Nov. 9, huge Washington Mutual Bank—which owns the first deed of trust—moved in to claim its right to the home. By then, the Allens had moved out, leaving an empty house with a sweeping view of the Pacific Ocean, some rusting lawn furniture, and a forlorn American flag hanging like a rag in the courtyard out front.

Surrender is never total with the Allens, though. They always bounce back higher. Like George and Louise Jefferson of the 1970s sitcom, they’ve moved on up—literally. Their new home, a 2,800-square-foot condo, is several streets up in the same Spy Glass Hill area of Corona del Mar, in a gated and guarded community called Harbor Ridge, overlooking their old neighborhood. They don’t own it, but it’s home. For now.