Investor, daughter lost $2 million: He ‘destroyed our lives’
Maud Campbell had the cash to purchase her Fort Myers Beach condominium, and she thought it was in a safe place: invested with Roy Dillabaugh.
In October 2007, she informed Dillabaugh she wanted her $473,000 back. Dillabaugh tried to get her to take out a mortgage, but she refused and said she needed the money for a Feb. 1 closing.
She never got it. Dillabaugh died a month later, and Campbell soon learned her money was gone. So was her daughter’s, who also invested with Dillabaugh.
“He has destroyed our lives,” Campbell said. “I had no debt. I didn’t owe anybody 15 cents. My daughter didn’t owe anybody 15 cents.”
Another investor sent Dillabaugh to Campbell and her daughter, Debra DeVries, about eight years ago. Between the two of them, they’ve lost nearly $2 million.
After Dillabaugh’s death in a car crash, Campbell and Devries were told they would get their money within 90 days.
In December, Campbell started calling The Dillabaugh Group. No one answered the phone.
“Then I was getting scared,” she said.
Campbell had put down $10,000 on the condo. Her real estate agent told her that she’d lose that if she pulled out of the deal, so she held on. Eventually, she got a mortgage by the end of February. But she still expected her money from Dillabaugh.
Nearly three years later, she’s still paying on that $500,000 mortgage.
Her daughter, now 52, lost even more money. DeVries and her husband got a settlement of more than $2 million after he was diagnosed with mesothelioma, a particularly virulent form of lung cancer often caused by exposure to asbestos.
The couple decided to build their dream home and purchased 50 acres for cash. But Campbell said Dillabaugh convinced them to take out a mortgage — using the land as collateral — to build the house, and invest the remaining settlement money with him.
He promised the investments would enable them to pay off the mortgage within five years.
“He smoked them good,” Campbell said. “They start out kind of small. Then Roy keeps coming back.”
DeVries’ husband died before the house was completed. Months before Dillabaugh’s death, DeVries asked for $700,000 back to pay off the house. Now she’s stuck with a mortgage she can’t afford.
“She’s barely staying alive,” Campbell said. “She’s got the place for sale.”
In the depressed real estate market, that’s proving to be difficult. And if she goes into foreclosure, she’ll lose everything, even the equity from the land.
“This man destroyed lives,” Campbell said. “Not just mine. He destroyed many, many lives.”
At his funeral, Roy Dillabaugh was eulogized as “a man who dedicated his life to giving and helping others.”
Within days after his 2007 death, however, Dillabaugh’s widow, Alice Jane, received a note handwritten by her husband: “I am (was) a criminal!”
Three years later, the depth of that criminal behavior — and its impact on some 12 dozen victims — is still being untangled.
Dillabaugh’s carefully crafted image as a Washington Twp. father of five, former minister and a pillar of his church was destroyed when he drove his Lincoln Town Car into an overpass pillar on Nov. 27, 2007. At least three of his biggest investors by then had begun inquiring about their money. The extent of the fraud has since become clear: In one of the biggest Ponzi schemes in recent Ohio history, Dillabaugh bilked 146 investors out of $12.4 million that his company took in but never invested.
The vast majority of them never recovered any money.
“I haven’t seen a penny,” said Lee Burcham of Englewood, who lost $218,704.
Dillabaugh’s death was ruled an accident, but one insurance company sued, claiming it was a suicide. Dillabaugh had more than 30 life insurance policies, allegedly purchased with the investors’ funds. Alice Jane Dillabaugh, his widow, collected more than $6 million from life insurance policies. She referred a reporter to her attorney, who declined to comment.
A court-approved receiver filed a lawsuit Jan. 14 in an attempt to recover investors’ money, claiming Dillabaugh placed the funds in a bank account and used them for personal expenditures.
Several investors said they were fooled by Dillabaugh’s background and dignified presence. “He seemed to be such an honest person,” said Maud Campbell, 75, of San Pierre, Ind. That was before she lost $473,679, her life savings, and her daughter, Debra Devries, lost $1,351,779.
Swindler changed will days before fatal car crash
As Roberto Garcia glanced at the car that passed him on Interstate 70 in Clark County, he noticed the driver was slumped over.
“I thought he was asleep because he had his head down,” Garcia said in a sworn deposition to a lawsuit. “As he was going off the road, he hit those rumblers and those rumblers are really loud, and I thought that would wake him up, but his head never came up.”
In the days before his death on Nov. 27, 2007, Dillabaugh changed life insurance beneficiaries and provided his secretary with detailed instructions on what to do if something happened to him.
“The question as to whether Roy Dillabaugh committed suicide is an open one,” said attorney Robert Hanseman, who filed a lawsuit against Dillabaugh’s widow and other parties Jan. 14.
What isn’t an open question is that Dillabaugh, who claimed to sell investments, ran a giant Ponzi scheme for years, leaving behind the financial equivalent of a Superfund site that has spawned litigation involving 146 investors who lost about $12.4 million. Unlikely parties such as the Miami Valley School and Normandy United Methodist Church have been dragged in on the court cases, along with some of Dillabaugh’s family members who claim they had no idea he defrauded investors.
Dillabaugh’s widow declined comment, as did her attorney. She has received between $6 million and $7 million in life insurance benefits since her husband’s death, according to Hanseman’s lawsuit.
Hanseman, who was appointed receiver by Montgomery County Common Pleas Judge Timothy O’Connell, is trying to get control of the assets on behalf of the defrauded investors.
“The goal is to get what is there and create a pool of money that can be given back,” he said.
Note instructed wife, secretary how to pay off investors
Joe Stebbins of Miamisburg, a retired plumber who lost nearly $205,000, is one of many investors who saw no warning signs. Dillabaugh served as his insurance agent with John Hancock before he invested with him. “We dealt with him for many years, and everything was on the up and up,” he said. “Fortunately, I didn’t put all my eggs in one basket. I don’t feel sorry for me, I feel sorry for some of the others.”
Dillabaugh claimed the investments of The Dillabaugh Group were insured. He mailed regular statements and sent checks to investors for interest payments. He told them they could withdraw their investments at any time, as long as they gave 90 days’ notice.
In the months before his death, at least two major investors did. One was 75-year-old Maud Campbell, who had invested $473,000. Another was her daughter, Debra DeVries, who had invested $1.3 million and wanted $700,000 back. Another client asked for $600,000 back, Campbell said.
“As of late 2007, Mr. Dillabaugh’s scheme was on the verge of collapse,” according to a complaint filed by Hartford Life and Accident Insurance Company, which sold 11 life insurance policies to Dillabaugh and had been holding about $3 million in claims after his death. “Mr. Dillabaugh no longer had sufficient new money to pay interest to older investors and imminent discovery of his illegal scheme was inevitable.”
Hartford sued Alice Jane Dillabaugh and her husband’s estate in U.S. District Court, claiming the insurer did not have to pay on the policies because his death was a suicide. The case was settled in December, but the details haven’t been made public.
The Hartford lawsuit contended that Dillabaugh acted like a man intending to take his own life. Eight days before his death, he called his oldest son Lorne and told him he had changed his will.
At his funeral, Dillabaugh’s secretary, Mary Johanna Long, gave Lorne a handwritten letter from his father that said Dillabaugh had made him a beneficiary on a life insurance policy worth $316,000. The letter included instructions to pay off Lorne’s investments, pay off the investment of one of Lorne’s friends, and to split the rest with Lorne’s sister, Julie Golembiewski of New Baltimore, Mich. Included was the change of beneficiary form, dated Nov. 19, 2007.
On Nov. 26, the day before his death, Dillabaugh told Long he had made her a beneficiary on one of his life insurance policies. He also gave Long two handwritten letters, one for her and one for Alice Jane. In the letter to Long, who is also a defendant in Hanseman’s lawsuit, he left specific instructions on how to reimburse investors.
In a rambling letter to his wife, he was more effusive, admitting misappropriating his investors’ funds and giving advice on which debts should be repaid first. “There should be enough life insurance to cover these debts,” he wrote, signing off, “I love you.”
The next day he was dead. The roads were dry and toxicology tests showed Dillabaugh had no trace of alcohol or drugs in his system.
“He clearly left a suicide note,” said Hanseman. “But we don’t know for sure if he committed suicide and there’s some pretty good evidence from eyewitnesses to support he did not. Although he was clearly suicidal during that time frame, there is no firm conclusion yet as to whether he committed suicide.”
Preying on former parishioners
Investors said Dillabaugh’s dignified presence led them to trust him. He always wore a coat and tie and never pressured clients with hard-sell tactics. His master’s of divinity degree was featured prominently on his business card.
“I don’t normally trust people, when it comes to money,” Campbell said. “But for some reason, I trusted this guy.”
“He was very professional, not flashy, a good people person,” added Lee Burcham of Englewood, who lost nearly $219,000 — money he intended to invest in his grandchildren’s education.
Many of the victims hail from the northwest Indiana town of Demotte, where Dillabaugh served as a minister decades ago. Hanseman said some victims were his former parishioners: “I can’t imagine any worse breach of trust.”
The victims did not know that Dillabaugh had not been licensed to sell securities since 2001, after he admitted selling a phony certificate of deposit for the purpose of using that money for his financial gain, according to court records.
Hanseman’s lawsuit states that none of the money invested with The Dillabaugh Group went to actual investments. Instead, it all went into Dillabaugh’s bank account, where it was used for his personal expenditures, including more than 30 life insurance policies.
“Roy didn’t invest in anything but himself,” Hanseman said.
‘Wanting to trust him’
His own family wasn’t exempt from his predatory practices.
Lorne, the oldest of three children from Dillabaugh’s first marriage, testified in a deposition that he was duped into thinking his father’s business was legitimate. He said his investment was worth $130,000, including interest.
His deposition also reveals a family torn apart. Dillabaugh married Alice Jane in 1974 and adopted her children Scott and Stacia. About that time, Lorne said, his father sat down his three biological children and told them they “were incompatible with his new family. And at that point he said that he would try to help us in any way that he could, but as far as on any sort of emotional level, that he was going to concentrate on his new family.”
Dillabaugh’s letter to Lorne specified that no insurance money should go to his son Ralph, a father of four who owns his own trucking agency in Phoenix, Ariz.
Ralph said he wasn’t surprised: “I had no relationship with my father,” he said. “For a lot of years it bothered me, but then I figured ‘Why let him win?’ ”
In his deposition, Lorne said he began investing with The Dillabaugh Group in 1994, two years after he moved to Ohio from California.
“He was a very persuasive person,” Lorne testified. “He just talked like this was an area, like finances, like this is what he knew. And so it was a combination of trusting, you know, and wanting to trust him.”
The wreckage left behind
Alice Jane Dillabaugh testified that she knew nothing about her husband’s business interests. She claimed to never have even heard of The Dillabaugh Group until after his death.
“It’s like I hit a concrete wall,” she testified about her husband’s handwritten confession to her. “The breath was knocked out of me. Disbelief.”
But Hanseman noted in his lawsuit that while Alice Jane signed off on multiple tax returns indicating the couple made about $30,000 annually, the Dillabaughs lived a “rather lavish lifestyle.”
Alice Jane acknowledged as much in her deposition. In addition to their home in Washington Twp., currently valued at $215,000, she said they had a lake-front vacation home in Tennessee, that they went on vacations to Europe, and that they invested in six weeks of time-shares in Fort Lauderdale, Hilton Head, Palm Beach, Hawaii and St. Thomas. He bought the St. Thomas time-share in the last year of his life, she said.
“His last three years, we were gone probably one week a month,” she testified.
Hanseman noted that Dillabaugh’s widow has collected millions, while the vast majority of investors have received nothing.
“I wish she had approached the matter in a different spirit,” he said.
Defendants in the lawsuit include Long, Alice Jane and Lorne — all because they received life insurance payments. The Miami Valley School, where Alice Jane’s grandchildren attended, and Normandy United Methodist Church, where the Dillabaughs worshipped, are also named as defendants.
“He became very generous in his last years with other people’s money,” Hanseman explained.
Officials at the school declined comment. So did the school’s attorney, Susan Solle. Dillabaugh chaired the finance committee at his church for about two years but had no access to funds, said Pastor David Brown. Richard Carr, the church’s attorney, said that there is no legal basis to include the church in Hanseman’s effort to recover funds.
“The leadership at Normandy was shocked,” Carr said about the allegations. “It’s been a tragedy for everyone involved.”
Attorney John Stachler, who represents more than 50 of the former Dillabaugh clients, said some have lost homes, others their life savings.
“These people are the salt of the earth, and have worked very hard for every dime they had,” Stachler said. “These people entrusted their life savings with him. And they woke up one day and realized it was all gone.”
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