Double Injustice

Because the interest rates were usurious, the interest still due on the debts was canceled. The victims also became liable to pay Mueller's estate three times the amounts of excessive interest they had been paid, and also faced being sentenced to five years in state prison for loan-sharking.

Mueller's records were so fragmented, however, that the amounts Mueller had returned to investors could only be guessed at by Locke -- and crudely, at that. The FBI had confiscated piles of checks Mueller had written to his debtors. But Mueller hadn't actually mailed the checks, because he couldn't cover them.

This didn't stop Locke from using the rubber checks to estimate amounts already paid to the victims, hoping to force them into settlements. He even went after interest that hadn't been paid out, but had been "rolled over" -- that is, added to the debt. In other words, under this usury theory, an investor who had never been repaid a cent by Mueller could still owe the trustee money.

The victims were astonished by Locke's audacity -- and his cruelty. Most -- including many elderly and infirm people -- settled with him out of court. Some lost what was left of their retirement nest eggs to Locke. Some had to declare bankruptcy to save their homes from Locke. To their disgust, Locke jumped into the bankruptcies he had caused to list the Mueller estate as a creditor.

The trustee was remorseless: He even took money from the small trust fund of a mentally disabled man and the estate of a victim who had died.

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Eugene Camillon, a retired contractor from Salinas, was pulled into Mueller's scheme by his daughter, Christine Holetz, who worked as Mueller's office manager. Camillon started by investing small amounts, which brought immediate, large returns. Then, drawn like a fly to flypaper by the sweet scent of 60 percent interest rates, he sold two houses and put in $200,000. When Mueller went under, Camillon lost $80,000. He also had to bail out his children, who were financially crushed. His sister-in-law lost a bundle, too. It was a family affair. The worse hurt, says Camillon, was that he convinced his best friends -- a couple he had known for many years -- to pony up $10,000. They lost it all and have not spoken to him since.

But the most bitter of Camillon's feelings are reserved for Locke -- "a rotten dog, a no-good son of a gun" -- who took $15,000 from him, adding to the misery of his family and the unfairness of the universe.

Other Mueller prey fared even worse. One man had to disgorge $125,000 to Locke. Another puked up $100,000 to the bankruptcy trustee. And Herbert and Lois Petersen, a retired couple impoverished by their dealings with Mueller, were compelled to pay $2,500 that they could ill-afford to get Locke off their necks. Petersen had a heart attack after going back to work to pay off the family debts. His wife wrote, "I am 71 years old. I grew up in a time that believed policemen were our friend and protectors. ... We were paying our debts, the rent, and had food on the table. We really felt victimized when the Trustee charged everyone who had lost so much with fraud and demanded cash payments. ... We are very close to losing our house. This is not the happiest of times."

By the middle of 1999, Locke had managed to extract $420,000 from Mueller's victims. Of this, $211,000 -- half -- went to pay Locke and his attorneys, Stromsheim & Associates of San Francisco, for the time they spent tracking down and suing the victims. The rest went to pay other lawyers involved in various stages of the aging bankruptcy case.

Ed Myrtle, an official at the U.S. Bankruptcy Administration, supervises Locke, a real estate broker with Byron Partners Inc. of San Rafael. Myrtle acknowledges that the bulk of real value in Mueller's estate came from the usury settlements paid by the victims, and that it was "unfortunate" the victims were hit twice, once by Mueller, and then by Locke. It was, he says, up to Locke's discretion whether or not to sue. Myrtle cheerfully admits, however, that he could have put a stop to it. He says he did not because he wanted the private-sector lawyers he hired to be paid.

Locke could have simply closed out the Mueller case and left the victims alone. Instead, he chose another road, using, as his reason, a supposed "fiduciary duty" to bring money into the estate. But the money he brought in did not go primarily to original creditors, but to lawyers who billed the dead estate half a million dollars. And to ... well ... to Jeffry G. Locke.

As trustee, Locke is paid a percentage of the money he distributes. Every dollar he forced the creditor-victims to disgorge, therefore, increased the amount of his fee.