Bonnett, 2004

Joe Bonnett meets with a client in December 2004. Authorities say Bonnett stole at least $1.35 million, perhaps more than $2 million, over the course of about nine years.

He stole from widows, lied to clients, evaded attorneys.

In cycle after desperate cycle, Omaha financial adviser Jerome “Joe” Bonnett Jr. took from friends to pay customers, from customers to repay friends. Total theft: at least $1.35 million, but perhaps more than $2 million, especially when investigators count interest and unmet investment returns.

It was, in the words of Douglas County’s top law enforcement officer, a “classic Ponzi scheme.”

At the same time, it was unlike any other.

Attorneys poring over Bonnett’s books found something they had never seen.

A con man with discipline: Bonnett compartmentalized his theft to just a handful of his 83 clients. In the process, he kept copious notes detailing how much he took and the profits his customers should have made.

A con man with a conscience: The 51-year-old Omahan penned apology letters long before any judge or defense attorney could tell him to do it.

A con man without an obvious compulsion: Investigators typically can draw a straight line between an embezzler and a casino or a drug debt or a mistress.

Not with Bonnett.

“No women. No drugs. No alcohol. No gambling,” said his attorney, Clarence Mock. “None of the things you normally associate with these cases.”

So what fueled his secret theft? What drove the double life of “an otherwise decent man”? And why did he end it all in such a sordid public death?

The answer just might lie in the root of all vices.

————

Ray and Becky Barta met Bonnett in the early 1990s, when Bonnett had just opened his own investment advisory office, Bonnett Financial Services.

Ray was a four-decade employee, doing computer work for Union Pacific; Becky a longtime hairstylist and manager at Garbo’s. Garbo’s offered a 401(k) plan, managed by Bonnett.

The Bartas hit it off with Bonnett. He was young, good-looking and personable, eager to make a name for himself. The Bartas were eager to turn their nest egg into something more.

“We liked him right off the bat,” Ray Barta said. “He was really encouraging. He always told us we were doing things the right way.”

Bonnett was the second child and first son of Mary and Jerome “Joe” Bonnett Sr., who worked in insurance.

After the junior Bonnett’s 1982 graduation from Millard South High School — where he wrestled and played football — he majored in business administration and finance at the University of Nebraska-Lincoln.

By age 28, he began to sell insurance, investment products and securities from an office near 120th Street and West Center Road.

Initially, business was good. He appeared in magazines and this newspaper, dispensing advice: Give your college-bound kids the maximum tax-free gift allowed. Diversify. Invest in the U.S. and overseas.

“We try not to keep our blinders on and think that all the best opportunities are sitting in our own backyard,” he said in 2004.

As they moved into retirement, the Bartas viewed their investments with Bonnett as a funding source for vacations.

Bonnett was on top of matters — promptly providing them money, even if they asked for it a bit early.

When Bonnett threw Christmas parties for his customers at his $350,000 home, it was nice but modestly furnished.

No crystal chandeliers. No wine stockpiles. No ornate woodwork.

“It was humble,” Becky said.

Bonnett, too.

“He never tried to get us in and out in a minute,” Ray Barta said. “We’d talk family, vacations, whatever — an hour every time. He’d be talking away — and all of a sudden he’d go, ‘Gosh, I have another appointment.’ Even then, he wouldn’t end it for another 10 minutes.

“Just a real good guy.”

————

Marjorie Phillips’ first impression of Bonnett was similar. The favorable feeling didn’t last, however.

The Omaha woman — she worked as a customer service rep; her husband, Warren, an electrician — had met Bonnett through his mother, Mary.

In the late 1990s Bonnett spoke to Phillips’ investment club, a group of about 20 women who met to pool their knowledge and money into various investments.

Bonnett seemed pleasant enough. So when the Phillipses received a substantial inheritance of stock transfers, they steered those investments toward Bonnett. Most of it already was in IRAs and other stocks and bonds that Bonnett simply had to steward.

About 1999, Bonnett called Marjorie Phillips in a rush.

I have an investment you should get in on, he told her. But you have to do it now. By 5 p.m.

The opportunity: a start-up called giftcertificates.com. The Omaha-based company sells gift certificates and gift cards that can be used at businesses.

Marjorie called her husband. The couple agreed to invest $30,000.

Like many start-ups, giftcertificates.com took a couple of years to get its footing and its cash flow.

Phillips didn’t have a problem with that.

She did have a problem with this: Bonnett didn’t return her calls seeking updates on that investment and others.

The only communication the Phillipses received were bills showing Bonnett’s fees, some of which seemed exorbitant.

“I kept calling him, and he would never call me back,” Phillips said. “I had questions that were going on with our account. I wanted to make some changes to our investments. I just couldn’t get him to respond.

“I finally got to the point that if he’s not going to respond, why would I stay with him?”

In January 2001, Phillips went to Securities America, the La Vista-based broker-dealer that Bonnett used for 20 years. She filed a written complaint against Bonnett. Bonnett and Securities America eventually agreed to settle Phillips’ complaint, returning $15,013.15 in fees.

“I’m assuming Securities America fired him after that,” Phillips said.

Not exactly. Bonnett continued to operate under the La Vista company’s umbrella until October 2015.

“You’re kidding?” Phillips said. “They kept him?”

Natalie Hadley, a spokeswoman for Securities America, called Bonnett’s case an “ongoing matter that we can’t comment on.” The company says it considers investment advisers “independent contractors,” not employees whom they hire or fire.

Whatever Securities America did or didn’t do to Bonnett, Phillips took care of her end. She, in effect, fired Bonnett — and took her seven-figure investment to another adviser.

“I never thought he was a shyster,” Phillips said. “I just got the impression he wanted to make a lot of money. He wanted to be a millionaire.

“Even now, I guess I don’t really think of him as a thief. Just a poor investor.”

————

Bonnett’s attorney prefers to leave off the term “poor.”

Bonnett was an investor, Mock said. Investors, by definition, take chances. Sometimes they pay off. Sometimes they fail.

Three of his investments in particular tanked: Medical Capital Holdings Inc., known as MedCap, which turned out to be a nationwide Ponzi scheme; Omaha franchises of the Fatburger restaurant chain, which fizzled here; and an office software program.

Then there was the economy.

In a 2009 interview in B2B Omaha magazine, Bonnett said he had “reduced” his client load from 220 to 100 to focus on retiring doctors and owners of emerging businesses.

Other investment advisers shook their heads at the thought that Bonnett had told his clients to take their money elsewhere as opposed to the clients simply taking their money elsewhere.

In that 2009 interview, Bonnett hinted at the difficulties of his business.

“The stock market is convulsing, unemployment is rising and the country, as well as the entire world, appears to be in a severe recession,” Bonnett said. “This is not easy on my business, but it makes people realize they need experienced financial advisers more than ever.”

He then promoted himself, saying he had developed “an extensive network of expert attorneys, accountants, insurance specialists to refer clients to.” He even quipped that his clients “view Bonnett Wealth Management as the conductor of their financial orchestra.”

Little did those clients know: A portion of Bonnett’s business was a junk symphony where he steered customers’ money to other customers to make it appear as if they were flourishing.

That tired melody has wreaked havoc on investors for the past century — from Charles Ponzi in the 1920s to Bernie Madoff from the 1980s to mid-2000s to the MedCap fiasco of the 2000s.

————

In his adaptation, Bonnett wasn’t robbing Peter to pay Paul.

He was robbing Robert to pay Helen; Rita to pay Joe.

Twenty-five years ago, at retirement age, Rita and Louis Smedra had socked away a sizable sum after a 33-year career of factory work at the Kellogg cereal plant in Omaha.

Rita spent the first few years of her retirement caring for her husband. He died in 2002 from complications related to Alzheimer’s and Parkinson’s.

Before Lou Smedra’s death, the Smedras gave $230,000 to Bonnett to invest.

“You don’t get a quarter-million dollars unless you’ve worked extremely hard,” said Rita’s son, Terry Smedra. “They took that money to Joe — and he was very congenial, very willing to help.

“I don’t believe he was a fraud in the beginning.”

In 2008, Bonnett persuaded Rita Smedra to give him money for an investment opportunity.

The opportunity, as it turns out, was all Bonnett’s. He ripped off Smedra over the next three years.

In May 2008, Smedra, then 82, wrote a $70,000 check to Bonnett’s business. From then until the end of June, Bonnett wrote $68,000 in checks from his business account to himself.

Five times over the next three years, Bonnett repeated the scheme. Smedra wrote a sizable check to Bonnett’s business. Bonnett used the money to pay himself or other customers.

Total pilfered: $340,000.

A woman of few words, Rita Smedra recently stood outside a courtroom where attorneys are fighting over what’s left. Inside that courtroom, state officials sought to secure Bonnett’s 83 customer accounts that total $47.5 million.

Over time, Mock says, Bonnett took advantage of five customers and two friends. It doesn’t appear that he touched the rest, Mock said.

That wasn’t much comfort to Smedra.

“I felt terrible,” Smedra said. “Awfully upset at the whole ordeal.”

She motioned to her adult son and daughter.

“That money was their future,” she said.

————

They are the snapshots of a seemingly successful life — a surface view, via Facebook.

There’s Bonnett and brood outside a sprawling ranch house — not a mansion, but not meek, either — across the street from a pool and a tennis court in the Omaha Westside school district. A good-looking guy with a good-looking crew: wife Susie and the couple’s son and daughter, 14 and 12.

There’s Bonnett in a power suit behind a cherry-wood desk dispensing advice from his tony office near 147th Street and West Dodge Road.

Bonnett compartmentalized his life in much the same way he compartmentalized his thefts, Mock said.

Friends and family say he gave them no sense that he was stressed, no sense that his business was crumbling under the steady exterior. (Authorities have said they have no indication that anyone else was complicit in the theft.)

As Bonnett’s scheme carried on from 2007, Bonnett carried on in the community. He was a faithful friend to the many professionals who knew him. He helped coach his son and daughter — rarely missing any of their soccer or tennis or golf or basketball. He was a fixture at their elementary school, working as a volunteer teacher in Junior Achievement.

Its focus: economic ingenuity and financial responsibility.

This past spring, he took a ski trip to Colorado with his children and the Morning Star Lutheran Church’s youth group.

Every day, friends say, he was the first up, cooking bacon and sausage and waffles. Encouraging each kid to have a blast — and to fill their bellies before they hit the slopes.

About the same time, Bonnett cooked up one of his last schemes.

After Duane Braesch died in August 2015, Omaha attorney Bob Guinan was tasked with sorting out Braesch’s estate on behalf of his widow, Helen Braesch.

One of the items Guinan found: a purported annuity policy. From February 2007 to July 2010, the Braesches had written more than $230,000 in checks to Bonnett to purchase a sizable annuity.

Guinan asked for the policy number. Bonnett put him off.

Bonnett told Guinan the annuity was with Assurity Life Insurance of Lincoln. So Braesch’s accountant filed a notice of death with Assurity in December.

Assurity informed the accountant that it had no policy under the Braesch name.

Bonnett emailed Assurity, telling the company to disregard the death notice and falsely claiming that the annuity was with a different company.

Guinan continued to dig. Bonnett continued to dodge.

Jig about up, Bonnett went to friends Robert and Diana Foster and told them he needed a loan to pay taxes.

Robert Foster wrote Bonnett a check for $400,000. On the memo line he wrote “loan.”

Indeed, Bonnett needed the loan to pay back taxes. He owed more than $100,000 — the IRS had taken out a lien against him.

But Bonnett left out what else he needed it for.

On March 8, he went to meet with Helen Braesch.

He showed her a printout of a receipt for a $73,000 wire transfer from his business to her account — telling the widow that it was the first installment in her annuity.

You’ll get four more annual payments through 2020, he said.

The problem: Helen Braesch hadn’t selected the option to receive payment in installments.

The bigger problem: There was no annuity.

Bonnett had used the Fosters’ money to pay Helen Braesch.

On April 12 of this year, Guinan, Helen Braesch and Helen Braesch’s adult son met with Bonnett.

He apologized and showed them spreadsheets of the Braesches’ payments and what they should have made.

If his apology wasn’t clear, the spreadsheet spelled out what he had done. In the margins, Bonnett had scribbled the words:

“Annuity does not exsit (sic).”

————

That wasn’t the only note Bonnett wrote.

The last week of May, Rita Smedra received a letter. The typewritten note, on Bonnett’s letterhead, had only one paragraph.

I used your money for myself, instead of your investments, it said, according to Terry Smedra. I’m sorry.

Attached was a spreadsheet that projected what Smedra’s $340,000 should have amounted to had Bonnett invested it.

Bonnett wrote that he was including the spreadsheet in case something happened to him.

He sent similar notes and spreadsheets to others he had duped.

In his four decades as an attorney, Douglas County Attorney Don Kleine has seen dozens of embezzlers ruin people’s financial futures.

“I’ve never seen anything like this,” Kleine said of the letters. “Let’s be clear — it wasn’t till somebody else brought this to light that he reached out to these people.

“But at least he took responsibility at that point. It shows he had a conscience.”

But what led him to the kind of desperate steps he took over that decade?

Both his brother and his attorney said they know of no compulsions that caused Bonnett’s crimes.

In the end, Mock said, his only vice may have been this: pride.

That is, Bonnett couldn’t bear to tell people that their investments had tanked, that his advice had failed them.

“He was leading a life of very quiet desperation as he was trying to figure out ‘How can I work my way out of this problem?’ ” Mock said. “All other aspects of his life, he’s a good guy. Cares for his family. Is well-liked by many who knew him. It’s just that he went down this path. Once you get down that path so far, you can’t work your way out. It’s too steep.”

Patrick Bonnett said his older brother got into the business because “he loved helping people.” He couldn’t bear the thought that he had let anyone down.

“It’s a lot of pressure when you’re helping other people,” Patrick Bonnett said. “It’s just sometimes you carry the weight of the world with you. I think that’s what he was doing. I really do.”

­­­————

“The foremost question on my clients’ minds is, ‘Am I going to be okay?’ ” — Bonnett, B2B Omaha magazine, 2009

Bonnett’s former customers are swimming in that question.

The short answer: Attorneys think so.

Unlike Madoff’s scheme of recruiting more investors to pay off previous investors, Mock says he thinks Bonnett limited his damage to the handful of customers and a couple of friends like the Fosters.

And Mock said Bonnett’s assets should be enough to rectify the losses. A court filing Thursday says his life insurance policy is worth $3.25 million. (Most life insurance policies pay out in the case of suicide as long as the policyholder’s death is more than two years from the issuance of the policy.)

That hasn’t alleviated the anxiety. A receivership is slogging through court. Retirees are worried about their long-held retirement plans. Businessmen about the money they lent Bonnett. Widows about their children’s inheritance.

“A lot of these people that are affected are probably 70-plus years old,” Terry Smedra said. “Maybe they’re basing their livelihood on that income. And all of a sudden, it’s gone. It’s not a good feeling.

“To me, the big question is ‘What was Securities America doing to police or oversee Bonnett?’ ”

The company declined to answer questions. Unlike banks and “wire houses” like Wells Fargo and Merrill Lynch — which monitor investors’ handling of accounts — Securities America considers investment advisers like Bonnett to be “independent contractors.”

Securities America provides investment products, but customers’ relationships are with individual advisers such as Bonnett, the company says.

On Oct. 6, 2015 — 20 years after Bonnett began with Securities America, almost nine years after the scheme started — Securities America and Bonnett terminated their relationship.

The parting is listed in financial documents as “voluntary.”

A handful of customers interviewed by The World-Herald said they received no notice of Bonnett’s break with Securities America. The company says that it doesn’t keep customer lists; those belong to the advisers.

Under that setup, it would have been up to Bonnett, in the midst of his deception, to disclose to clients that he no longer worked through Securities America.

The company wasn’t the only potential stopgap.

The Nebraska Department of Banking and Finance wrote in court records that it conducted “a routine investment adviser examination” of Bonnett’s business on June 22, 2015.

“During the examination, substantial co-mingling of assets between (Bonnett’s businesses) and Bonnett was discovered,” the banking department wrote in a court document. “Commissions were received directly into Bonnett’s personal bank accounts and then money was transferred between (Bonnett’s businesses) and Bonnett.”

It is unclear what Nebraska Department of Banking regulators did about Bonnett for the nine months after it spotted Bonnett’s commingled accounts. A spokeswoman did not answer questions.

On March 14 of this year, the investigation ramped up when Guinan, the widow’s dogged attorney, alerted the department to the fake annuity.

In June, the department and the Nebraska Attorney General’s Office sought and obtained a judge’s order appointing a receiver to sort out the mess.

Six weeks later, investors said they didn’t know how safe their money was.

“Our concern then and now is ‘Do we still have anything?’ ” Ray Barta said. “We’re still concerned. Very concerned.

“We haven’t heard a word.”

­­­————

There’s one more photo of Bonnett, a photo his family and friends would rather not see: his mugshot.

Wearing a blue golf shirt, Bonnett looks scared. Stressed.

The night of May 18, Bonnett heard a knock on his front door. Thinking it was someone serving him with a lawsuit, Bonnett didn’t answer.

He soon heard a pounding on his back door. As he cracked the door, Mock said, an Omaha police officer thrust his weapon across the threshold and ordered Bonnett out of the house.

The officer handcuffed him and took him to jail on two felony fraud counts.

“The arrest, the way it went down, really shook him,” Mock said.

Eight days later, his story splashed across the front of the newspaper. Nine days later, he was dead.

Mock said Bonnett was working with him to show exactly what had been stolen — and how much needed to be repaid. Many attorneys in the case are convinced that Bonnett had concluded he would be worth more dead than alive.

“He had an extraordinary degree of remorse about what he had done,” Mock said. “Unfortunately he just drowned in the cascade of consequences that occur with the revelation of his misconduct. He just could not live with the ignominy of what he had done any longer. The pain was too great.”

The morning of May 28, he sent a suicidal text to his sister. Panicked family members called in a missing-persons report, telling police they didn’t know where Bonnett was.

About noon, Bonnett made a phone call of his own.

Without giving his name, he told a 911 dispatcher there was a suspicious white man in a black SUV casing the Apria Healthcare building at 5505 F St.

Omaha Police Officer Juan Fortier pulled up to the back of the brown, sheet-metal building. Bonnett stood, out of sight, on the passenger side of his Chevy Tahoe.

As Fortier got out of his police cruiser, he heard a shot. Saw a puff of smoke.

Cruiser camera video captured the rest: Bonnett’s body. A rifle between his feet. Calls of “Sir, sir” as Fortier attempted to stir Bonnett.

The officer’s groans filling the microphone.

­­­————

The why’s are obvious; the answers elusive.

Why did Bonnett do this to his family, his wife, his kids? Why did he do it to his customers, many of them frugal and faithful investors?

Why did he do it to that officer?

All of it is a mystery — and most of it is futile speculation, Mock said.

But the answer to most of those questions may be rooted in a sordid sort of pride.

Mock said there’s little doubt that Bonnett didn’t want his family to find his body before authorities did. Hence the trip to an industrial area — to a parking lot with no backdoor neighbors.

But why the weird phone call to police describing someone casing a building?

Perhaps Bonnett wanted officers to arrive fast, Mock said, without any warning that he had a gun and intended to harm himself. No suicide mention. No suicide negotiator. No weapons drawn.

But Mock also can’t help but wonder if Bonnett’s last act was one of defiance.

Was he ticked that the arresting officer had shoved that gun inside his back door? Mock wonders. Was this his way of getting back at the Police Department?

Or was the plan simply to make sure someone found him before his family did?

Whatever, Mock regrets the horror the responding officer and other officers witnessed.

“Can you imagine?” he said.

Friends, even former customers, are having a hard time. Bonnett’s June 2 funeral was packed with more than 400 people who had no knowledge of his secret side.

A family friend pored through some of Bonnett’s photos. In the most recent ones, the kids and his wife are beaming.

Then there’s Bonnett. Half-smile. Distant gaze. Tired eyes.

“I’m sure there was a sense of falsity with his two worlds,” the friend said. “As a man, your family, your career, your reputation in the community are intertwined.

“There is no joy in those smiles. No relaxed joy. Something’s eating at him. I guess we now know what it was.”

Contact the writer: 402-444-1275, todd.cooper@owh.com

Reporter - Courts

Todd Cooper covers courts, lawyers, trials, legal issues, the justice system and government wrongdoing for The World-Herald. Follow him on Twitter @CooperonCourts. Phone: 402-444-1275.

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