Crimes of Persuasion

Schemes, scams, frauds.

History of con-artists may explain why they are such crooks and liars.

Investors in Jeopardy Around This Conman

03/07 - William Smoak "Doak" Fairey Jr. was always looking for the big payoff.

When a winning appearance on the television game show "Jeopardy" failed to give him lasting wealth, Fairey turned to gambling casinos, tall tales about working at the White House and, eventually, crime.

The 50-year-old Fairey, a longtime North Myrtle Beach resident who moved to Sarasota, Fla., in 1998, was sentenced Feb. 16 in Spartanburg to 21 months in federal prison after pleading guilty to taking $182,000 from investors in a fraudulent business scheme he promoted nationwide.

Fairey, a former three-time "Jeopardy" winner, already was serving a four-year stint at an S.C. prison for a conviction in 2004 of obtaining money by false pretenses.

Fairey is appealing the 2004 conviction and will have a hearing Wednesday in the S.C. Court of Appeals in Columbia.

His signed confession in the federal fraud case, however, means Fairey will remain in the custody of the U.S. Marshal's Service regardless of Wednesday's outcome.

Fairey's intelligence and amazing recall of trivia were overshadowed by lies and a get-rich-quick compulsion, former friends and associates say, and it was those flaws that led to his undoing.

"He was extremely obsessed with money," said Steve Beverly, a professor at Union University in Jackson, Tenn., and a victim of Fairey's most recent scam.

Beverly operates a Web site devoted to television game shows and has interviewed hundreds of winners, including Fairey.

"Out of all those people, maybe four or five were as obsessed with money as Doak Fairey," Beverly said. "He's the only one who was obsessed enough to start ripping people off, though."

The set-up

Beverly's Web site - tv - is a labor of love for the broadcasting professor and self-proclaimed game show nut, who has more than 2,400 videos of game shows stored in his attic.

"I do it for fun," Beverly said. "It's hard to make any money with a Web site."

Fairey, however, saw the potential for profit and, without Beverly's knowledge, made the Web site the centerpiece of his latest scam.

Fairey could not be contacted, and his wife, a Sarasota school teacher, did not respond to e-mails seeking comment. There is no telephone listing for William or Susan Fairey in the Sarasota area.

Beverly said Fairey apparently learned about the Web site in 2000, when the two men appeared on the ABC television network show "20/20" as part of a news segment on game show contestants.

"The night that show aired I got an e-mail from someone in South Carolina asking how they could get in touch with Doak because he owed them $25,000," Beverly said. "I thought it was just some crank e-mail. If I had known then what I know now, I would have gone to the ninth and 10th degrees to help that guy."

According to a federal indictment, Fairey forged documents in September 2001 to make it appear as if he, not Beverly, owned the game show Web site.

Fairey then forged more documents to make it appear as if Sony Corp. was negotiating to buy the Web site, according to the indictment.

Fairey then solicited money from investors in several states, sending them copies of the forged documents and saying he could get them in on the ground level of a multimillion-dollar deal.

Fairey convinced 18 people to send him $182,000 over the next three years, even though he had no relationship to the Web site and no rights to sell it.

"I found out something suspicious was going on in 2004 when I got a call from a guy in California wanting to know how he could get in touch with Doak," Beverly said. "He was another game show contestant who had invested a good bit of money in Doak's scam, and he wanted his money back."

Beverly started investigating the California man's claims and learned there were more than a dozen people who thought the game show Web site was about to make them rich, including one of Fairey's college friends who had invested $25,000.

"Ultimately, everyone who had been involved with the scam starting talking to each other, and we were able to get the federal authorities involved," Beverly said.

Fairey was indicted in April and pleaded guilty five months later to fraud. He could have received a prison sentence of up to 20 years and a fine of as much as $250,000.

Beverly said the FBI told him one of Fairey's motives for the fraud was a mountain of gambling debts.

One example of those gambling debts: a $12,500 civil judgment the Hollywood Casino in Tunica, Miss., obtained against Fairey in November 2000.

Fairey was desperate to get on one of the big-jackpot game shows, Beverly said, and in 1999 he nearly made it to the hot seat opposite Regis Philbin on "Who Wants to Be a Millionaire." Fairey lost to another contestant in the fastest-finger round and later complained to the game show's producers that he was cheated by a computer glitch.

Beverly said he was disappointed with Fairey's 21-month sentence, followed by three years of probation.

"It's an awfully light sentence for someone facing their second fraud conviction," said Beverly, a former television news anchor in Wilmington, N.C.

How it began

Fairey's initial claim to fame came during his three-day winning streak on "Jeopardy" in July 1988. Fairey earned $33,200 on the game show and wrote about his television experience for The Sun News, calling it "an adrenaline rush."

Fairey took some of the money he earned on "Jeopardy" and started a computer consulting and desktop publishing company, called The Support Group, in Myrtle Beach. He eventually moved the business to his North Myrtle Beach home where he worked while wife, Susan, taught at North Myrtle Beach Primary School.

Fairey's former friends and associates say he never got over his "Jeopardy" appearance, or the thrill of making a quick buck.

"He would come to my home to fix my computer and instead of fixing it he'd be in the back room playing 'Jeopardy' on the Internet," said Scott Rudisill, a former Little River businessman who once owned the Sea Screamer speedboat attraction.

Fairey grew up in the Upstate. His father, William Sr., was an Orangeburg veterinarian and his mother, Peggy, was the former society editor for the town's newspaper. Fairey's father died in 1995 and his mother died last year.

Fairey told The Sun News in 1997 that his father nicknamed him "Doak" after former Heisman Trophy winner Doak Walker.

"My father just liked the name," Fairey said.

Fairey showed great intellectual promise as a child, but he told The Sun News he was more interested in trivia and pop culture than formal studies.

"I never let school get in the way of my education," Fairey said. "If I had a math book and a Reader's Digest in front of me, I wouldn't open the math book until I had read every article in Reader's Digest."

Fairey attended Clemson University in the late 1970s, where he was a student athletic trainer, but left the school in 1979. He moved to the Grand Strand that year and finished his degree at CCU in May 1980. Fairey and his wife were married one month later.

Fairey made an unsuccessful run for Horry County Council's District No. 2 in 1989, saying the area needed a "can do" councilman who would represent young working families. Fairey, a Democrat, didn't fare well in the Republican-heavy district, capturing 23 percent of the votes. While the loss put an end to Fairey's public office aspirations, he remained fascinated by politics.

Early financial problems

Fairey's obsession to return to televised game shows paralleled the late-1990s and early-2000s resurgence of the genre, led by the popular "Who Wants to Be a Millionaire."

Fairey's obsession also paralleled his own growing financial problems.

In 1991, Fairey defaulted on a loan with The Anchor Bank in Myrtle Beach. The bank obtained a $5,104 civil judgment against him the following year.

In 1992, Coastal Federal Bank repossessed Fairey's automobile and obtained a $14,369 judgment against him.

In 1998, Claridge at Park Place Inc. obtained a $7,585 civil judgment against Fairey for another unpaid loan.

Fairey also settled a foreclosure lawsuit in 1993 before that case went to trial.

Even as his debts were mounting, Fairey was telling friends that good fortune was just around the corner.

Fairey claimed he had been interviewed three times in the 1990s for jobs at the White House, in part because of his supposed connections with President Bill Clinton and Vice President Al Gore Jr.

Fairey later claimed to be a campaign staffer for Gore's presidential run in 1999 and that Gore promised him a government job if he won the election.

Federal campaign records show Fairey contributed $2,500 to Clinton and Gore between 1995 and 1999, but there is no indication either politician knew who he was. A Gore spokeswoman did not respond to an e-mail seeking comment about Fairey.

The Internal Revenue Service charged Fairey with tax fraud in 2003, and court documents from that case show Fairey volunteered for the Gore campaign but earned his living as director of human resources for TruGreen Lawn Care in Sarasota.

Fairey worked for TruGreen in 1998 and 1999, when he was fired. Fairey sued the lawn care company for wrongful discharge and won a $100,000 settlement, which he used to help start a marketing consultant company. That venture attracted one client, court records show, which paid Fairey $36,000 over a two-year period.

The IRS charged Fairey with making $76,500 in fraudulent deductions on his 1999 and 2000 federal tax returns, saying Fairey used forged documents to back up some of the deductions.

The agency won its court hearing last year. Fairey and his wife, who was charged with negligence but not fraud, are appealing the case.

Building a scheme

Fairey's stories about working at the White House were so convincing he was able to talk Rudisill, the former Little River businessman, into giving him a $25,000 loan in 1996.

"Supposedly, Al Gore had promised him a job as a liaison at the White House, and he needed to send the money that day to seal the deal," Rudisill said. "Stupid me, I gave him the money."

Rudisill had hired Fairey in the summer of 1996 to do some programming work on his computer. That work included entering financial figures into an accounting spreadsheet.

"He knew I had just gotten a $300,000 check for a boat I sold," Rudisill said.

Rudisill said Fairey told him he was selling his computer business for $500,000 and that he could repay the loan within 90 days. That deadline came and went without payment, so Rudisill arranged to meet Fairey one morning at the ticket counter of his Sea Screamer attraction.

"He didn't show up," Rudisill said. "So I called him, and he told me his daughter had been deathly ill and he'd been at the hospital with her. When I told him I'd come by his house to get the money, he told me to stay away because his daughter had been quarantined."

Rudisill said he spent years trying to convince local law enforcement to pursue criminal charges. Fairey had moved to Florida by the time an indictment was issued in June 2001.

Fairey represented himself in the case and spent three years throwing up legal roadblocks to a trial.

Fairey was tried and convicted of obtaining money by false pretenses on July 21, 2004. Fairey did not show up for the trial. He was sentenced in absentia to four years in state prison followed by four years of probation. He also was ordered to pay back the $25,000 when he was released.

Fairey's appeal of that conviction is scheduled to be heard Wednesday by the S.C. Court of Appeals in Columbia.

Following his trial, a fugitive warrant was issued for Fairey, and he was arrested in Florida in October 2004. Fairey was sent back to South Carolina, and he spent the next two years at the Evans Correctional Institution in Bennettsville.

Evasions and excuses

Even while he was fighting Rudisill in court, Fairey was using his "Jeopardy" and game show connections to run a real estate scam, according to court documents in Florida.

Leszek Pawlowicz had been another guest with Fairey on the "20/20" television segment about game show contestants in 2000.

Pawlowicz, once dubbed "the Michael Jordan of game shows" by The New York Times, has won more than $200,000 on game shows such as "Jeopardy," and "Win Ben Stein's Money."

"Doak and I were friends, or so I thought," said Pawlowicz, a Flagstaff, Ariz., computer consultant. Pawlowicz said he spoke with Fairey on several occasions between 1999 and 2004 and met with him a few times when Fairey visited Las Vegas.

Pawlowicz said Fairey convinced him in 2002 to invest $35,000 into some Florida property that he claimed was prime for development.

"He told me he had formed a real estate partnership and one of the investors was a state senator from Florida," Pawlowicz said. "It all looked good."

Pawlowicz said he eventually learned that the state senator Fairey mentioned, Mike Bennett, wasn't really involved in the purported land deal. Pawlowicz also learned there was no impending development and no land and that all of the money he invested had been spent by Fairey.

"It was a whole soap opera of excuses from him," Pawlowicz said. "He even faked a heart attack to put me off a little while."

Pawlowicz traveled to Florida in 2004 to confront Fairey and try to get law enforcement to press criminal charges.

"When I told him [Fairey] to give me my money or I'd go to the authorities, he just laughed at me," Pawlowicz said. "I quickly discovered why he was laughing. I couldn't get anywhere with law enforcement."

Pawlowicz said the FBI told him law enforcement wasn't interested in fraud cases unless more than $100,000 was involved. So Pawlowicz took his case to a St. Petersburg, Fla., television station, which broadcast a report about Fairey and the land deal.

When police learned about the television report, Pawlowicz said, they started to investigate Fairey and found out about his outstanding warrant in the Rudisill case. That's when Florida police arrested Fairey and sent him back to South Carolina to serve his prison sentence.

Pawlowicz also filed a civil suit against Fairey in July 2004, but said he doesn't expect to ever see his money. Pawlowicz dropped the lawsuit in 2006.

"I figure I have zero chance of getting my money, and life is too short to worry about things like that," Pawlowicz said.

Beverly, the game show Web site owner, said he also is ready to move forward, but he worries about what will happen when Fairey is released from prison.

"I'm not convinced that he will ever learn his lesson," Beverly said. "I hope for his family's sake that he has changed, but I doubt it. When he gets out in less than two years, who's to say what he's going to do next."

David Wren - (Myrtle Beach) Sun News

Time Runs Out for Investment Scammer - Takes Own Life

Joel Wallerstein parked his Land Rover outside the Omni Hotel in South Austin and rented a room for the night.

In Room 218, the 46-year-old father of three laid out notes to his family.

He wrote to his wife, Randee, a dynamo at raising money on Austin's black-tie philanthropy circuit. He wrote to his two college-age daughters and to his 23-year-old son, whom Wallerstein had recently bought a Ferrari and a half-million-dollar house near his own, on one of the toniest streets on Austin's western fringe.

By May 2006, after decades of unscrupulous business dealings that left a string of court liens and judgments against him, Wallerstein had backed himself into a corner he couldn't escape.

Wallerstein, who stood 6 feet 1 inch and had perfect white teeth, has been described by a former associate as someone who always took pains to appear wealthy and successful. He used that image — the nice clothes, the nice house, the nice cars — to court investors for what would become his biggest score, according to a lawsuit. Then the money flowed like never before.

By the time he checked into the Omni that night, Wallerstein had a collection of luxury cars, including a $160,000 Aston Martin. His wife had a 7-carat diamond ring. They were regulars at the charity balls and galas that draw Austin's wealthy philanthropists.

But lawyers for the life insurance companies that had invested millions of dollars in Wallerstein's arcade game leasing company were closing in fast.

In lawsuits filed later, the insurance companies said they suspected that Wallerstein and his father, Irving Wallerstein of Dallas, had lied to them about Corporate Amusements Inc., which the father and son said leased video games to businesses to use as a corporate perk.

Later, another group of investors would claim in a separate lawsuit that Corporate Amusements "was a sham and a fraud (and) had conducted little or no business."

In all, investors claim that nearly $17 million showered on what Irving and Joel Wallerstein represented as a healthy and expanding business had instead been used to maintain Joel Wallerstein's opulent lifestyle.

Joel Wallerstein's family and closest friends declined to be interviewed for this story. But details gleaned from business associates, acquaintances and court documents paint a picture of a man driven to extremes by a desire for wealth and status.

That Joel Wallerstein defrauded his investors is not contested by Wallerstein's wife and children, who said through their lawyers and in court documents that they were unaware of the fraud before he died. Irving Wallerstein's lawyer said the father was tricked, too, and thought his son's business was legitimate when he agreed to help secure investors for Corporate Amusements.

In Room 218, Wallerstein pressed a revolver to his head and pulled the trigger.

When maintenance workers found his body, the FBI began an investigation. Meanwhile, the investors who say they were scammed started trying to answer the question: How had Joel Wallerstein fooled them all?

Image of success

Joel Wallerstein grew up in Dallas, where he attended the elite St. Mark's School of Texas. He majored in real estate at the University of Texas, married Randee Berson in 1981 and, after earning a law degree from St. Mary's University in San Antonio in 1983, joined his father in the real estate business in Austin.

Irving Wallerstein, now 77, headed a group of investors that bought the Dobie Center on Guadalupe Street next to the UT campus in the 1980s. By the time Irving Wallerstein led a $10 million renovation of the building in 1989, Joel Wallerstein had joined him in the student housing business.

In addition to the mall and dorms at the Dobie Center, Wallerstein Property Management owned and managed Madison House and Dexter House in West Campus. It also developed the Three Points Plaza shopping center in Pflugerville in the late 1980s.

San Antonio architect Robert Hanley, who lived in Austin at the time, said he and Joel Wallerstein mixed in the same young professional crowds in town around that time. Wallerstein, he remembers, always took pains to portray an image of success.

Even in laid-back, pre-tech-boom Austin, Hanley said, Wallerstein drove expensive cars and dressed impeccably in stylish and expensive clothes, always seeming a little more polished than the rest of the crowd.

"He tried to associate with the wealthy and the influential and powerful as a young man in Austin," Hanley said. "He had an image he was trying to keep up, and these were the people he could schmooze and draw into his ventures."

Hanley said he designed the renovation of Wallerstein's office at the Madison House dormitory, but at the end of the project, Wallerstein refused to pay him about $10,000 of the agreed fee.

Law license lost

It is unclear how much law Wallerstein actually practiced in those years, but complaints from clients eventually got him bounced from the profession.

In petitions filed in court by the State Bar of Texas, Wallerstein is accused of missing deadlines in a child custody case and, after taking fees for a real estate case, doing little or no work and then asking for more money. In another case, according to the petitions, he was hired to collect a debt and allowed to keep a percentage of what he collected. He recovered about $4,500 but didn't tell his client and kept all the money, the petition said.

In 1995, Joel and Randee Wallerstein filed for Chapter 7 bankruptcy, claiming about $240,000 in assets and $750,000 in debts. Their bankruptcy filing said they owed the IRS $294,000.

Wallerstein's law license was suspended for two years in 1996, and he was disbarred in 1999 after twice failing to answer the petitions accusing him of misconduct.

The same year he lost his law license, Wallerstein decided to buy an arcade in the Dobie Center, which his family no longer owned.

The arcade's owner, John Lairsen, said Wallerstein agreed to pay about $100,000 in cash at closing and an additional $25,000 spread over two years.

After they signed the contract in 2000, Lairsen said he didn't receive a single payment toward the $25,000 balance. When he tracked Wallerstein down, he said Wallerstein refused to pay and implied that Lairsen had falsified the arcade's accounting books.

Lairsen sued Wallerstein and won by default after Wallerstein never answered the lawsuit in court. Lairsen said he eventually got his money.

As time went on, Lairsen said, he started getting calls from other people who had entered business deals with Wallerstein and later found Lairsen's name in court records.

Lairsen said he told them, "I think the guy's a dirtbag, and I think he does whatever he can to swindle his way through life."

Turning to games

Out of the Dobie arcade, Corporate Amusements was born in 2000. Joel Wallerstein was president and opened a corporate office on West 11th Street.

A 2001 article in the Austin Business Journal said the company put arcade-style games, such as pinball, Frogger and Golden Tee, in company break rooms, executive suites and customer waiting areas as a perk for employees or customers.

"Games have replaced the water cooler of the '50s," Wallerstein told the business newspaper.

The article said the company bought games for $1,000 to $5,000 and rented them out for up to $300 a month, rotating an inventory of about 600 games.

"It's one more amenity companies can utilize to show employees the company is a progressive, fun place to work," Wallerstein was quoted as saying.

In 2002, Wallerstein asked his father to join the business and help it grow, said Irving Wallerstein's lawyer, Mike Gibson of Dallas.

Joel Wallerstein gave his father balance sheets showing a profitable business model, and from there, the father's role was strictly to "help introduce Joel to business contacts," Gibson said.

Their quest for investors is detailed in the two lawsuits filed in Travis County probate court after Wallerstein's death.

It started with a $500,000 loan from Laredo National Bank in early 2003. Then Irving and Joel Wallerstein asked a Florida investment banker named Rick Davis to help them recruit more investors. Davis couldn't be located for this story.

The lawsuits by Liberty Life Insurance Co. and a group of investors from Floridatell the following story:

Davis came to Austin, where he visited Joel Wallerstein's home and met his family. He saw the trappings of a successful businessman and left thinking Wallerstein was from an affluent background with numerous connections.

According to the Florida investors' lawsuit, Davis arranged for Joel and Irving Wallerstein to meet a group of potential investors in Miami. At those meetings, Joel Wallerstein told stories of learning the arcade game business by collecting coins from the family arcade during college. Irving Wallerstein explained that his job was to bring in outside capital so Corporate Amusements could expand. He offered to personally guarantee a few 30-day loans, the lawsuit said.

Joel and Irving Wallerstein showed the investors copies of leases, financial statements and other records the father and son said proved that the company was a thriving business that brought in millions annually but needed more money to grow — documents the lawsuit says were fakes.

On March 1, 2004, a group of 10 Florida investors loaned Corporate Amusements $900,000. Later that year, the group loaned another $1.35 million.

Then the father and son found a company with deeper pockets.

It is not clear how they found Liberty Bankers Life Insurance Co. of Dallas, but the lawsuit filed by Liberty describes a pitch that was similar to the one in Florida — with Irving and Joel Wallerstein giving fraudulent financial statements showing Corporate Amusements' healthy profit margins, according to Liberty's lawsuit.

Mitchell Madden, a lawyer for Liberty, said the father and son also gave Liberty a list of businesses they said had been leasing games from Corporate Amusements and their phone numbers. Those numbers, though, went to people who would pretend to be Corporate Amusements customers, Madden said. Later, a call center was hired to have its employees pose as customers while reading from scripts, he said.

Joel Wallerstein "set up an elaborate scheme," Madden said.

The pitch worked.

In mid-2004, Liberty Bankers Life Insurance Co. loaned Corporate Amusements $900,000, loans guaranteed by Joel and Irving Wallerstein, the company's lawsuit said.

In October 2004, Liberty gave Corporate Amusements a revolving line of credit allowing it to borrow up to $8 million. Liberty agreed to increase it to $12 million in December 2005,a credit line that soon would be mostly exhausted.

A month later, Liberty bought $2.5 million of stock in Corporate Amusements.

Climbing the ladder

All that money seems to have fueled Joel Wallerstein's rise to a higher rung in Austin society.

Joel and Randee Wallerstein's names were on the roster of givers and organizers for a variety of causes around town: the Austin Symphony League, the Jewish Community Association of Austin, the March of Dimes.

"You name it; they bought tickets," said Karen Olivarri, a former West Austinite and friend of the couple's. "They were very good in the community, and they helped a lot of people."

Randee Wallerstein joined committees to organize charity fundraising galas and posed with Joel for the society page cameras.

"He was quiet; she was the real fireball," said Victoria Hentrich, an event planner who knew the couple.

Hentrich said the couple moved in the upper rungs of Austin society. "But it wasn't like the 'A' crowd. I would say it was a wealthy crowd, but it wasn't like the Dells of the world."

The couple sometimes hosted fundraising events at their home, including information sessions for the Dell Children's Medical Center of Central Texas, to which they donated more than $25,000.

Their split-level corner house on Pascal Lane in the Rob Roy subdivision of western Travis County had a walk-in wine closet, a marble staircase and a backyard pool with a waterfall and views of the surrounding hills. Randee Wallerstein's closet, which was about 15 feet by 25 feet, was filled with designer clothes.

In 2005, according to court documents, Wallerstein purchased a $360,000 membership — and paid first-year membership dues of $19,000 — in Exclusive Resorts, a luxury vacation club that gave him access to million-dollar vacation homes worldwide.

Seeking more cash

By 2006, Joel and Irving Wallerstein were going back to their investors, asking for more money, according to the lawsuits.

Liberty Bankers Life Insurance Co. declined, according to Liberty's lawsuit, but Corporate Amusements received $1.7 million from Liberty's parent company, American Reserve Life Insurance Co., on April 7, 2006 — just over a month before Wallerstein killed himself.

But by May 5, Liberty officials had grown suspicious.

Joel and Irving Wallerstein had failed to provide audited financial statements for their business, as required under their loan agreement, according to Madden. And when Liberty officials called the Corporate Amusements office, they were told that Larry Spears — who they thought had been the chief financial officer — had left the company and disappeared, the company's lawsuit states.

"I don't think Larry Spears ever existed," Madden said. Efforts to locate Spears for this story were unsuccessful.

On May 12, 2006, Liberty's lawsuit said, the company demanded access to Corporate Amusements' offices to review books and records. Company officials told Joel Wallerstein that they would arrive in Austin on May 16.

Wallerstein agreed, the lawsuit said. But the day before the planned meeting, Wallerstein sent an e-mail to Liberty President Brad Phillips saying he needed to cancel the meeting because he needed time to have the company's records "centralized and put in proper order," the lawsuit said.

"I guarantee to you that our records will be in proper order for your review within 2 weeks," Wallerstein's e-mail said.

Liberty sensed something wrong and stepped up pressure on Wallerstein. On May 16, Liberty asked a Dallas judge to issue a temporary restraining order against Corporate Amusements and Joel and Irving Wallerstein to freeze the company's assets.

Two days later, Joel Wallerstein's body was found at the Omni Hotel.

In court filings, the investors said they concluded that Wallerstein's company owned no equipment other than some machines in the Dobie Center and in a small storage facility and did no business of any kind from 2000 to 2006.

Lawyers for Randee and Irving Wallerstein agree that the company did little business.

Devastated by loss

Joel Wallerstein's newspaper obituary said his greatest joy was spending time with his family. His former brother-in-law said Joel's children have struggled mightily with his death.

Randee Wallerstein's lawyer, Steve Smit of Austin, said she was "devastated about everyone alleging what Joel did" and is trying to move on with her life.

Olivarri, the friend of the Wallersteins', said Randee Wallerstein had been planning a party for the couple's 25th wedding anniversary at the Driskill Hotel when Joel died.

"It was a terrible, terrible shock for her," Olivarri said.

Travis County Probate Judge Guy Herman declared this week that the investors are entitled to $1.2 million in assets held in Wallerstein's estate and $15.4 million in damages.

In March, Randee Wallerstein and her children agreed to pay the investors roughly $5 million in cash and assets — which the investors say was obtained through Joel's fraud — to settle their portion of the lawsuit, according to Madden, the life insurance company's lawyer.

That includes $2.5 million in life insurance proceeds and the title to the family's house on Pascal Lane. The home is now on the market for $1.59 million.

The settlement lets Randee Wallerstein keep 15 percent of the profit from the sale of her home, as well as a 2006 Mercedes CLS 500 worth about $75,000 and $125,000 in cash and $250,000 in personal property — the so-called family allowance allowed under Texas law.

Wallerstein's son had to turn over title of the house his father bought for him and the Ferrari, valued at close to $300,000. All three of Wallerstein's children must give up their 2006 Land Rovers.

Irving Wallerstein has admitted that because he was a 50 percent owner of Corporate Amusements, he is partly responsible for his son's fraud, said Gibson, his lawyer. Irving Wallerstein has moved out of his house in Dallas and turned over $1.1 million in assets to the investors, his lawyer said.

In all, Madden said the investors have recovered more than half of the money they gave to Corporate Amusements and still have legal action pending against Irving Wallerstein and other parties, including an accounting firm and the call center.

An FBI spokesman said the agency continues to investigate the Wallerstein case.

05/07 - By Steven Kreytak AMERICAN-STATESMAN